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Latest guidance for employers
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HMRC has published the latest issue of the Employer Bulletin. The June issue has information on various topics, including:
- PAYE Settlement Agreement (PSA) – agreements and a mailbox closure.
- Update – mandatory payrolling of benefits in kind to launch in phases.
- Reminder – file monthly Construction Industry Scheme (CIS) returns or face late-filing penalties.
- Low Earner’s Pension Payment – what employers need to know.
- Employment Rights Act 2025 – actions to take now.
- Helping your workforce get ahead – encourage sending tax returns early.
Internet link: GOV.UK
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HMRC mileage rate increased to 55p
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The headline approved mileage rate has increased to 55p per business mile for the first 10,000 miles, with effect from 6 April 2026. For each business mile over 10,000 miles, the approved mileage rate remains at 25p per business mile.
This is part of a government package of measures intended to address rising fuel prices.
Approved mileage rates may provide relief from Income Tax where an employee or a self-employed individual makes business journeys in their own vehicle. Similar rules apply for the purposes of national insurance contributions (NIC).
Separate rates apply for motorcycles and bicycles, and there is also a rate for passenger payments.
No changes have been announced to these rates. However, the government has committed to a review of all rates and has indicated that this will be set out at a future Budget.
In a statement to parliament, Dan Tomlinson, the Exchequer Secretary to the Treasury, said:
‘In March, the government announced a review of mileage rates for employees using their own vehicle for work and the self-employed who use the simplified expenses rates.
In recognition of the pressures facing drivers as a result of the effects of the Iran war, the government is today announcing the first uprating of mileage rates in 15 years, back dated to April, to provide immediate support to both groups.
‘Mileage rates will increase for 2026/27 from 45p to 55p for the first 10,000 miles, and 25p thereafter, with effect from 6 April 2026.
‘This will represent the largest ever increase to these mileage rates, benefitting around two million employees and one million self-employed individuals, saving over £120 a year for a worker doing 6,000 business miles.’
Internet link: Parliament
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Small businesses to benefit from strengthened debt advice services
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Small businesses and the self-employed struggling with their finances to receive a helping hand as debt advice services are strengthened, the Treasury has announced.
The Treasury is making a £4 million funding boost over three years for business debt advice services support.
The funding will go towards expanding access to expert support to help businesses get back on track. The Treasury says this will benefit an additional 16,000 businesses over the next three years to total 75,000 businesses.
The Treasury says the funding builds on the success of the Business Debtline delivered by Money Advice Trust
There will be an additional £2 million funding this year to help modernise debt advice, it added.
Rachel Blake, Economic Secretary to the Treasury, said:
‘From the plumber fixing your radiator to your local café, small businesses are the backbone of our economy, and we know they sometimes need a helping hand when times get tough.
‘We’re building on the success of our expert debt services to help tens of thousands more get back on their feet.’
Internet link: GOV.UK
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Hospitality sector calls for 10% VAT rate
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Hospitality businesses, teams and organisations are being urged to sign a new petition calling for the government to cut the VAT rate for the sector to 10% by UKHospitality.
The trade group has launched #VATsTheProblem, a sector-wide campaign asking for the government to cut the rate of VAT for hospitality businesses, so it is in line with European levels.
UKHospitality is urging the entire sector to back its call by signing a new petition, with the aim to get a million signatures.
Hospitality groups, including the British Beer and Pub Association, the British Institute of Innkeeping and CODE Hospitality, are also supporting the campaign.
Celebrity chef and business owner Tom Kerridge said:
‘Our sector is under huge pressure. We know it. We live and breathe it every day.
‘We know that the key to unleashing hospitality’s potential to grow and thrive into the future comes through a VAT cut. We’re making sure government knows that too.
‘This is a nationwide campaign with ambassadors big and small spreading the word to everyone that will listen, all asking for the same thing; a cut to hospitality’s VAT to 10%.’
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HMRC boosts funding for taxpayers needing extra support
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More than £11 million in funding has been made available to taxpayers struggling with their tax affairs.
The doubling of funding comes as part of HMRC’s Voluntary and Community Sector Grant Funding Scheme. The funds will be available for organisations to help customers with their tax affairs.
From 8 June, organisations can submit bids for the funding, which is available for voluntary and community sector organisations to provide specialist advice and support to HMRC customers who may need extra help with their tax affairs, interacting with its digital services or claiming entitlements.
Dan Tomlinson, Exchequer Secretary to the Treasury, said:
‘I’m delighted to build on our commitment to customers who need the most support and make this latest round of funding available for our partners in the voluntary sector who provide invaluable assistance to them.
‘This funding means customers, who may be struggling with their tax affairs, are able to get the help they need to make a real difference to their situation.’
Internet link: GOV.UK
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Phased rollout of payrolling for employee benefits a ‘welcome step’
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The decision to phase in the mandatory payrolling of benefits in kind is a ‘welcome step’ to allow employers and payroll software providers more time to prepare for significant changes, says the Association of Taxation Technicians (ATT).
Benefits in kind are non-cash perks such as company cars or private medical insurance. Currently, most employers report these once a year using a Form P11D, with tax collected through adjustments to employees’ tax codes. This can lead to inaccuracies and the possibility of unwelcome tax bills after the end of the tax year.
Under payrolling, the value of these benefits is added to employees’ pay in real time, so the correct tax is deducted through the payroll each month. Although this improves accuracy and transparency it also requires employers to gather detailed information. They must also ensure their payroll systems can handle the changes.
HMRC had planned to introduce mandatory payrolling for all benefits and more detailed information requirements from April 2027. However, it has now confirmed a phased approach will be taken.
Jon Stride, Chair of the ATT’s Technical Steering Group, said:
‘This is a sensible and welcome step by HMRC. Moving to real-time taxation of benefits should ultimately improve accuracy for employees, but the original timetable based on full implementation in one go was overly ambitious.
‘A phased approach gives employers, software providers and HMRC the time needed to get the systems right and avoid unnecessary disruption.’
Internet link: ATT
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Expansion of ‘uncertain tax treatment’ rules cause for concern
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Government plans to extend the rules requiring some taxpayers to declare ‘uncertain’ tax positions risk creating more uncertainty, compliance burdens and tax disputes according to the CIOT.
The uncertain tax treatment regime currently requires large businesses to flag uncertain interpretations of tax law to HMRC upfront if significant amounts of money are at stake.
The government is proposing to turn it into a much wider transparency regime, reaching beyond large businesses into individuals and trusts, expanding to cover additional taxes and potentially introducing a new, much broader trigger for notification.
The CIOT is warning that the proposed third trigger – where there is more than one ‘credible’ interpretation and HMRC’s view is not known – is too subjective to work effectively in practice.
Lauren Fletcher, CIOT Tax Technical Senior Manager, said:
‘These proposals would expand the uncertain tax treatment rules to more taxpayers, more taxes and a broader set of uncertainties – a potentially significant compliance expansion. But they are unworkable in their current form and need further development before any legislation is brought forward.
‘The government is right to want to reduce the ‘legal interpretation’ tax gap and give taxpayers more certainty. But these proposals risk doing the opposite regarding certainty. A notification regime should provide clarity, not create a fresh layer of uncertainty around whether a taxpayer is required to notify in the first place.’
Internet link: CIOT
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Over 110,000 taxpayers yet to register for MTD
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More than 110,000 unrepresented taxpayers who must register for Making Tax Digital (MTD) from April 2026 have still not done so, according to the Low Incomes Tax Reform Group (LITRG).
LITRG’s estimates are based on official HMRC statistics on the number of unrepresented taxpayers it estimates will be in scope for MTD from April 2026, alongside recent public comments from senior HMRC officials on registration and sign-up rates.
From April 2026, taxpayers with gross income of more than £50,000 from self-employment or rental income in the 2024/25 tax year are mandated to use MTD unless they are exempt.
From April 2027, the £50,000 threshold falls to £30,000 and then to £20,000 from April 2028.
LITRG believes that of the 216,000 unrepresented taxpayers HMRC expect to be in scope for this year, around 111,000 have still to register.
Sharron West, LITRG Technical Officer, said:
‘While most of the taxpayers who need to use Making Tax Digital from April 2026 have the services of a professional tax adviser or accountant to help them, there are a significant number who don’t, and many of them have still not signed up.
‘We are concerned that there are a substantial number of people who should register but don’t realise they need to.
‘However, the good news is that there’s still time for these taxpayers to get ready ahead of the first reporting update due on 7 August 2026.’
Internet link: Chartered Institute of Taxation
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Don’t ignore Simple Assessment letters, says HMRC
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HMRC has urged customers not to ignore Simple Assessment letters for the 2025/26 tax year.
HMRC issues around 1.8 million Simple Assessment letters and stated that people should check the figures in their letter against their own records.
The letters will be sent to those who have tax to pay on income that has not been taxed through Pay As You Earn (PAYE) or Self Assessment.
Individuals may receive a Simple Assessment letter if they owe tax that cannot be collected automatically by HMRC, for example, if:
- there is tax to pay on interest on savings or dividends
- a second income has not been taxed
- tax is due on pension income
- they received more tax-free allowance than they were entitled to
- the tax cannot be collected through a tax code (for example, larger amounts owed, typically £3,000 or more).
Any tax owed should be paid by 31 January 2027, unless a different date is shown.
Myrtle Lloyd, Chief Customer Officer at HMRC, said: ‘If you receive a Simple Assessment letter and have tax to pay, please don’t ignore it. It is quick and easy to pay any tax owed via the HMRC app.
‘If you need extra support or want to find out more, search ‘Simple Assessment’ on GOV.UK.’
Internet link: HMRC
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Government announces VAT will be cut from household electricity bills
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The government recently announced that VAT will be cut from household electricity bills from 1 October in time to impact the next Ofgem price cap.
The move is part of new Prime Minister Andy Burnham’s commitment to help ease the cost of living.
The cost of this immediate action for this financial year is being funded from the cancellation of the £1.8 billion Digital ID programme.
Any further action on energy bills will be taken at the Budget, alongside the publication of a forecast from the Office for Budget Responsibility (OBR). All decisions at that point will continue to be funded and also consistent with the government’s fiscal rules.
The Prime Minister said: ‘Westminster has not been working for people for too long, with families struggling with the cost of living.
‘We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.’
Internet link: .GOV
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HMRC reminds people with side hustles to register for self assessment
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HMRC is reminding people with side hustles that they will need to tell it if they earn more than £1,000.
The Help for Hustles campaign aims to assist individuals with side hustles to ‘get their tax right, quickly and easily’.
New entrants to self assessment should register for the 2025/26 tax year by 5 October 2026.They must file their online tax return and pay any tax due by 31 January 2027. HMRC has an online tool to help people with side hustles to check if and when they need to report their additional income.
Kevin Hubbard, Director of Small Business and Individuals at HMRC, said: ‘For many people, a side hustle is a valuable source of extra income. If you’re earning more than £1,000 a year from your side hustle it’s important to understand your tax responsibilities, and HMRC wants to make that as straightforward as possible.
‘You can check if you need to do a Self Assessment tax return by using the tool on GOV.UK.’
Internet link: HMRC
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Government unlocks major finance package for small businesses
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Significant reforms to small business finance have been announced by the government.
The centrepiece of the plans is an expansion of the British Business Bank’s (BBB) Growth Guarantee Scheme (GGS) which provides a 70% government guarantee on commercial loans to SMEs of up to £2 million.
The scheme will scale up to facilitate an additional £2 billion of SME lending per year by 2028/29. This will bring the total SME lending supported through the scheme to £3.35 billion per year, more than double the current £1.35 billion.
The maximum term length of a loan is also increasing from six to ten years for loans of up to £1.1 million.
In addition, the maximum size of businesses that are eligible for a loan under the scheme is rising from £45 million in annual turnover to £54 million.
The BBB estimates these changes will support an additional 12,000 businesses per year by 2028/29, a 150% increase on the 8,000 currently being supported, bringing the total to 20,000.
Louise Hellem, Chief Economist at the Confederation of British Industry, said:
‘The government deserves credit for listening to business and putting forward a package that recognises the practical finance challenges firms face. The priority now is delivery and making sure the support is simple to access, well understood by businesses and effective in crowding in private capital.
‘If implemented well, these reforms can help more SMEs scale, export and adopt new technologies here in the UK – supporting productivity, stronger local economies and long-term growth.’
Internet link: HM Treasury
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Government steps up drive to reconnect young people with £1.6 billion in unclaimed savings
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The government is stepping up its efforts to reconnect young people with unclaimed savings in Child Trust Funds (CTFs).
Around 6.3 million Child Trust Fund accounts were opened for children born between 1 September 2002 and 2 January 201
More than 750,000 young adults still have unclaimed matured accounts, holding £2,200 on average and totalling over £1.6 billion.
CTFs were introduced to give every child a financial asset at adulthood. However, accounts can go unclaimed for a number of reasons, including difficulty locating them, people forgetting they have them, or a decision to leave the funds invested for the time being.
The government has set up a Child Trust Fund Taskforce, bringing together CTF providers to drive a coordinated effort to increase reunification of accounts.
Members of the Taskforce will include One Family, Coutts, Nationwide, HSBC UK, Pilling, The Coventry (Co-operative), Sheffield Mutual, Unity Mutual, Forester, Healthy Investments and The Share Foundation.
Rachel Blake, Economic Secretary to the Treasury, said:
‘Too many young people are missing out simply because they are not aware of where their CTF is or how to access it.
‘We are acting to fix that by bringing government and industry together – improving coordination and making it easier for people to find and claim what’s rightfully theirs.’
Internet link: HM Treasury
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Targeted subsidies are needed for firms to tackle Britain’s NEETs crisis
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Targeted subsidies, rather than expensive tax breaks, are the most cost-effective way of supporting employers to get young people into work, according to Resolution Foundation analysis.
The think tanks warns that the number of young people not in employment, education or training (NEET) passed one million earlier this year. It says this is a crisis that risks scarring the living standards of a generation.
A range of solutions have been proposed to encourage firms to hire more young people. But a Resolution Foundation report shows that there is a vast gulf in their cost-effectiveness.
The report estimated that the Youth Jobs Grant, which offers firms £3,000 to hire an 18-24-year-old who has been on Universal Credit for six months or more, will create 2,800 additional jobs at a cost of around £36,700 each.
The Jobs Guarantee, which funds six months’ part-time employment for those out of work for at least 18 months, comes in at roughly £38,000 per additional job, making it three-and-a half times cheaper than scrapping employer National Insurance contributions (NICs).
Lindsay Judge, Research Director at the Resolution Foundation, said:
‘One million young people outside of work, education or training is a sobering milestone – the highest figure for 13 years, and a reality that risks lasting damage to the life chances of a generation. But reaching for employer tax cuts to resolve this doesn’t add up.’
Internet link: Resolution Foundation
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HMRC still has a long way to go on customer service, says CIOT
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HMRC’s performance data for 2025/26 shows it has made progress on customer service but still has a way to go, according to the Chartered Institute of Taxation (CIOT).
The data shows a mixed picture with progress on compliance activity, digital adoption and HMRC’s telephone service.
However, challenges remain around debt levels, correspondence handling and customer satisfaction.
The CIOT welcomed the news that HMRC has met their target of 85% of attempts to get through to an HMRC helpline adviser succeeding. This is the first time it has met their target in this area.
The CIOT also noted that HMRC has missed its other four customer experience targets.
Charlotte Barbour, Chair of the CIOT’s Technical Policy and Oversight Committee, said: ‘HMRC has some notable achievements in 2025/26 including record compliance yield, improved telephone performance and increased usage of digital channels. However, service levels are still below where they should be, customer satisfaction remains below target and HMRC continue to struggle with a persistently high level of tax debt.
‘Use of HMRC’s digital channels continues to tick up but it will need an acceleration if HMRC are to hit their target of 90% of customer interactions online by 2030. It’s good news that HMRC are answering their phone lines more quickly than a year ago, but it is still taking twice as long as it did in the 2010s.’
Internet link: CIOT
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Prime Minister cuts business rates for pubs, clubs and music venues
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Prime Minister Andy Burnham has slashed business rates for pubs, clubs and live music venues in England by 20%.
The reduction will take effect from April 2027 and will save the typical pub an estimated £1,100 next year, according to the government.
Designed to cut costs for working people and communities, the move will benefit nearly 32,000 pubs, clubs and live music venues, the government said.
The changes will be fully funded, including through reviewing reliefs for businesses that do not make a positive contribution to local communities, such as vape shops.
Mr Burnham said: ‘For too long, governments have stood by while cherished venues have disappeared from our local high streets.
‘This government will back the businesses that people want to see in their communities. I said I would protect pubs and local high streets – the beating heart of our communities – and that’s what we will do. What we’re announcing . . . is just the start as we work to bring back hope across the country.’
Responding to the announcement, the Federation of Small Businesses (FSB) said: ‘We are encouraged at the signal from the Prime Minister . . . , instructing his government to plan for a significant increase in Small Business Rate Relief at the heart of the next Budget.’
Internet link: HMRC FSB
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