Business News England: July 2026 UK Tax, HMRC & SME Updates

Welcome to the latest edition of Business News England.

This edition covers updates affecting businesses, employers, landlords, and individuals across the UK. Topics include tax and HMRC changes, employment legislation, business support, and economic developments. Each section highlights how these updates could directly impact business owners, including your tax liabilities, employment practices, costs, and growth opportunities. Staying informed will help you make confident decisions and remain compliant.

If you would like to discuss how these updates may affect your business or personal finances, please contact Naseems Accountants. Our experienced team provides clear, practical advice tailored to your needs and can help you plan with confidence.

Key Takeaways

• Temporary VAT reduction introduced for qualifying children’s meals and attractions.
• HMRC announces a higher mileage allowance from April 2026.
• Companies House delays filing reforms until April 2028.
• Mandatory payrolling of Benefits in Kind will be phased in.
• Government launches new AI chatbot on GOV.UK.
• New funding opportunities for UK SMEs and biotech businesses.
• Businesses should prepare for upcoming HMRC deadlines and consultations. Key deadlines and consultations to be aware of include:

What Burnham’s Rule Could Mean for the UK

Following Sir Keir Starmer’s resignation as Prime Minister, Andy Burnham has emerged as the clear favourite to become the next leader of the Labour Party and the UK’s next Prime Minister.

Widely recognised for his leadership as Mayor of Greater Manchester, Mr Burnham is known for promoting regional growth, investment, and public services. While many policy details remain unconfirmed, his previous statements and record in Manchester offer insight into the direction his government may take.

Understanding these potential policy changes can support long-term planning for businesses, employers, and investors. Below is an overview of key areas likely to shape Mr Burnham’s agenda.

The Financial Markets’ Perspective

Any incoming Prime Minister faces the same fiscal constraints and budgetary rules, and Mr Burnham has indicated that he intends to operate within those existing frameworks.

Leadership changes often unsettle financial markets. However, bond and currency markets have remained stable following Mr Burnham’s leadership campaign announcement, suggesting investors are taking a cautious yet measured approach.

This confidence may be due in part to Mr Burnham’s experienced economic advisers, including former Bank of England Chief Economist Andy Haldane and former Goldman Sachs Chief Economist Lord Jim O’Neill.

Mr Burnham has reassured financial markets by clarifying his previous comments on government borrowing and bond markets, emphasising his commitment to maintaining economic credibility.

Policy Priorities

While many policies are still under consultation and party approval, several consistent themes have emerged throughout Mr Burnham’s political career.

Devolution

A long-standing priority for Mr Burnham is greater devolution of power from Westminster.

He has proposed creating a dedicated Department for Devolution and a “Northern No.10” to give regional authorities more control over investment, infrastructure, and economic development.

He has also suggested significant Treasury reforms to support regional decision-making, though these proposals have raised concerns about potential costs and disruption.

Supporters poiSupporters cite Greater Manchester’s economic growth, transport improvements, and housing investment during Mr Burnham’s tenure as evidence of the benefits of devolved decision-making. However, some economists remain cautious, noting that similar arrangements elsewhere in the UK have produced mixed results.

Small Businesses and Pubs

Mr Burnham has openly criticised some existing policies affecting small businesses. Proposals discussed are:

• A 20% reduction in business rates for pubs and live music venues.
• The possible abolition of business rates for some small independent shops, cafés and family-run businesses.
• Funding these measures through increased taxation on large warehousing and online retail operators.

If implemented, these proposals could offer valuable support to many independent businesses, especially in the hospitality sector.

State Pension

Mr Burnham has confirmed his support for retaining the State Pension Triple Lock.

However, although he previously supported compensation for WASPI women affected by State Pension age changes, he has now ruled out introducing the proposed package.

Welfare and Employment

Reducing long-term welfare dependency is also expected to be a policy priority.

Mr Burnham has expressed support for the recommendations of the 2026 Milburn Review, which highlighted that almost one million young people aged between 16 and 24 are currently not in education, employment or training (NEET).

Future reforms are likely to focus on helping more young people enter employment and reducing long-term welfare costs.

Taxation

Mr Burnham has confirmed that Labour’s manifesto commitments regarding the three largest taxes remain unchanged.

However, previous comments suggest he may support:

• Increasing the additional Income Tax rate from 45% to 50%.
• Introducing a new 10% Income Tax band for lower earners.

Currently, there is little indication that Corporation Tax or employer National Insurance contributions will be reduced. Mr Burnham’s principal policy priorities.

His proposals have focused largely on expanding social housing through:

• Redirecting existing affordable housing funding towards council house construction.
• Using the National Wealth Fund alongside private investment to support regional development banks.
• Reforming local taxation through the introduction of a Land Value Tax.

The goal is to increase housing supply and give local authorities more responsibility for housing investment.

Andy Burnham’s Background

Andy Burnham, 56, has held several senior government positions, including roles at HM Treasury and as Secretary of State for Health.

Since 2017, he has served as Mayor of Greater Manchester, winning three consecutive elections and overseeing transport, housing, and regional economic initiatives.

Although unsuccessful in previous Labour leadership contests in 2010 and 2015, he now appears well positioned to become the party’s next leader and Prime Minister.

What Could This Mean for Businesses?

While many policy details remain unconfirmed, businesses should monitor developments closely. tment, employment policy and housing could all influence business planning over the coming months.

As further announcements are made, reviewing your financial plans, tax position, and growth strategy will help ensure your business is prepared.

Britain’s Yearly £44 Million Health and Safety Violations Bill

A recent Freedom of Information (FOI) request has revealed that health and safety breaches are costing UK businesses more than £44 million in fines each year. Data released by the Health and Safety Executive (HSE) also shows a steady increase in prosecutions for serious health and safety offences between 2023 and 2025.

The findings highlight the importance of maintaining effective health and safety procedures, particularly as businesses continue to face rising operating costs and increasing regulatory scrutiny.

Rising Prosecutions for Health and Safety Breaches

According to the HSE data, businesses were fined an average of £44.1 million per year between 2021 and 2025. Although total fines fell slightly to £40.9 million in 2025, the number of serious breaches leading to prosecution continued to rise.

Prosecution cases increased from:

• 428 in 2023
• 446 in 2024
• 496 in 2025

This upward trend is expected to continue throughout 2026.

The HSE typically brings prosecutions where investigations identify serious breaches of health and safety legislation and where legal action is considered to be in the public interest. Depending on the circumstances, charges may be brought against businesses, company directors or business owners.

Construction Remains the Highest-Risk Sector

The research, commissioned by Breathe HR, specialists in HR and compliance support for small and medium-sized enterprises (SMEs), found that construction businesses accounted for 38% of all prosecution cases in 2025, making it the sector with the highest number of enforcement actions.

With rising business costs already placing pressure on many organisations, a significant health and safety breach could have serious financial and reputational consequences.

Phil Coxon, Managing Director at Breathe HR, commented:

“Reviewing health and safety policies and risks might not be the most glamorous task on employers’ to-do lists, but our research shows it’s not something leaders can afford to overlook.”

Building a Strong Health and Safety Policy

An effective health and safety policy is more than a legal requirement, it helps protect employees, reduce business risk and demonstrate good governance.

Breathe HR recommends that employers take the following practical steps:

• Develop a clear health and safety policy and review it regularly.
• Keep the policy easily accessible for all employees.
• Appoint a competent person with overall responsibility for health and safety.
• Ensure clear day-to-day responsibility at every business location.
• Carry out suitable and sufficient risk assessments for all workplaces and activities.
• Review risk assessments regularly and update them when circumstances change.
• Maintain accurate records of incidents, inspections and safety measures for audit and insurance purposes.
• Ensure employees understand the company’s health and safety procedures through appropriate training and communication.
• Display the official Health and Safety Law poster in each workplace where required.
• Introduce appropriate control measures to reduce identified risks.
• Maintain appropriate first-aid arrangements and actively support employee health and wellbeing as part of your duty of care.

Why Health and Safety Compliance Matters

Strong health and safety management helps businesses avoid costly fines, legal action and operational disruption. It can also improve employee wellbeing, reduce workplace accidents, strengthen your reputation and demonstrate compliance with legal responsibilities.

Regular reviews of your policies, procedures and risk assessments can help identify potential issues before they become significant problems.

Further guidance and practical resources are available on the Breathe HR website:
https://www.breathehr.com/en-gb/resources/health-and-safety-basics-a-checklist-for-smes

Small businesses account for two-thirds of Britain’s tax shortfall.

The latest figures published by HMRC reveal that the UK Treasury recorded a tax shortfall of £59.2 billion for the 2024/25 tax year. According to the Measuring Tax Gaps 2026 Edition report, the tax gap, the difference between the amount of tax that should have been paid and the amount actually collected, has risen to 6.4%, up from 5.3% in 2023/24.

Although HMRC collected £865.2 billion during the 2024/25 tax year, representing 93.6% of all tax due, small businesses accounted for 62% of the total tax gap. Much of this shortfall was attributable to Corporation Tax, with the tax gap increasing to 18.1%.

HMRC noted that the Corporation Tax gap had remained relatively stable until the COVID-19 pandemic. Since then, it has risen significantly, partly due to improved data collection and increased levels of non-compliance.

Summary of figures

Key findings from the report include:

• The VAT tax gap increased to 6.6% in 2024/25.
• The tax gap for Income Tax, National Insurance Contributions and Capital Gains Tax stood at 4%, down from 5.3% in 2013/14.
• The excise duty tax gap was 5.5%.
• The largest areas of tax lost remain Corporation Tax, Income Tax, National Insurance Contributions, and Capital Gains Tax.
• Individuals accounted for the lowest proportion of the overall tax gap at 4%.
• HMRC identified failure to take reasonable care, errors, and tax evasion as the main behavioural causes of unpaid tax. Tax evasion alone represented 12% of the total tax gap during the year.

The full HMRC report is available here:

https://www.gov.uk/government/statistics/measuring-tax-gaps

What does this mean for businesses?

HMRC continues to increase its focus on tackling tax non-compliance, particularly among small businesses. With the tax gap widening, businesses can expect greater scrutiny of tax returns, record-keeping, and compliance procedures.

Maintaining accurate accounting records, submitting returns on time, and seeking professional advice where needed can significantly reduce the risk of penalties, enquiries, and unexpected tax liabilities.

If you need support with your tax calculations, Corporation Tax returns, VAT, or HMRC compliance, book your free consultation. Our experienced team will ensure your records are accurate, your returns are submitted correctly, and your business remains fully compliant with HMRC requirements.

A response to the Land Remediation Relief consultation

The Government has published its response to the consultation on Land Remediation Relief (LRR), reviewing whether the current Corporation Tax relief continues to encourage the redevelopment of brownfield land and whether reforms are needed to improve its effectiveness.

Land Remediation Relief is designed to encourage businesses to regenerate contaminated or long-derelict land while helping to reduce pressure on greenfield development.

Currently, qualifying companies can claim:

• An additional 50% Corporation Tax relief on qualifying revenue expenditure.
• A 150% deduction for qualifying capital expenditure.

The relief covers two main categories:

• Contaminated land, where expenditure is incurred to prevent, reduce or remove contamination.
• Derelict land is land that has remained continuously derelict since 1 April 1998 and requires the removal of buildings or structures before redevelopment can begin.

What did the consultation find?

Feedback from businesses and industry professionals suggested that Land Remediation Relief is rarely the deciding factor in developers’ decisions to invest in a site.

Instead, decisions are generally driven by factors such as:

• Planning risks.
• Construction costs.
• Market conditions.
• Overall project viability.

Many respondents also highlighted that qualifying remediation costs often cannot be accurately estimated until detailed site investigations are complete, making it difficult to factor the relief into early project planning.

Businesses also raised concerns that the current rules are too restrictive. Several essential remediation activities fall outside the scope of the relief, including:

• Certain demolition works.
• Mineshaft grouting.
• Gas-holder remediation.
• Removal of some invasive plant species.

These activities are often necessary before land can be safely redeveloped.

Challenges for SMEs

Small and medium-sized businesses reported that claiming Land Remediation Relief can be administratively difficult.

Common concerns included:

• Remediation costs are being bundled into broader contractor invoices, making it difficult to identify qualifying expenditure.
• Inconsistent interpretation of HMRC’s guidance.
• Limited clarity around which costs qualify.

Many respondents also noted that the payable tax credit often has only a limited influence on project viability. In many cases, companies preferred to carry losses forward to offset future profits that would otherwise be taxed at higher Corporation Tax rates.

While grants can improve project viability, they are often discretionary and slow to obtain. By comparison, Land Remediation Relief is more predictable but frequently provides only modest financial benefit.

What happens next?

The Government concluded that, in its current form, Land Remediation Relief is not fully achieving its objective of encouraging brownfield redevelopment.

Rather than abolishing the relief, the Government believes there is a strong case for reforming the scheme to make it more effective, accessible, and aligned with modern remediation practices.

Further details on any proposed changes are expected in due course.

What does this mean for businesses?

Property developers, construction companies, and businesses involved in land regeneration should monitor future announcements carefully. Any changes to Land Remediation Relief could affect project costs, tax planning, and investment decisions.

If your business is undertaking property development, land remediation, or brownfield regeneration projects, schedule a free consultation with Naseems Accountants to maximise available tax reliefs, evaluate project viability, and ensure you claim all eligible Corporation Tax deductions in accordance with current HMRC regulations.

More consultations hint at what’s to come.

The Government has published a number of consultations on upcoming tax and business policy changes. While these proposals are not yet law, they provide valuable insight into the direction future legislation may take and the issues that could affect businesses over the coming years.

Consultations also provide businesses, employers and advisers with an opportunity to influence future policy. Interestingly, many Government consultations receive relatively few responses, meaning individual businesses and SMEs can have a greater opportunity to contribute their views than many realise.

Below are two consultations that may be of particular interest to employers and business owners.

Call for evidence on PAYE Settlement Agreements (PSAs)

HMRC has launched a Call for Evidence to review how PAYE Settlement Agreements (PSAs) operate in practice, with the aim of improving clarity, consistency and administrative efficiency.

A PSA allows employers to settle the Income Tax and Class 1B National Insurance Contributions (NICs) due on certain employee benefits and expenses, rather than reporting them through payroll or on individual P11D forms.

What is HMRC looking at?

The review focuses on how PSAs work in practice rather than on changing the underlying tax rules.

HMRC is seeking feedback on:

• How employers decide whether a benefit or expense is minor, irregular or impracticable to report through standard PAYE processes.
• How PSAs interact with payrolling benefits and P11D reporting.
• Areas where the current rules create uncertainty or inconsistent treatment.
• How employers calculate tax liabilities, including gross-up calculations and tax band allocations.
• Whether the current PSA system places a disproportionate administrative burden on SMEs.

The Government has highlighted that PSAs are intended for situations where it is genuinely difficult to determine the taxable value attributable to individual employees, such as catering provided at large staff events.

The consultation also explores whether employers of different sizes or operating in different sectors face varying challenges when using PSAs.

The consultation closes on 15 September 2026.

You can view the full consultation here:

https://www.gov.uk/government/calls-for-evidence/paye-settlement-agreements-call-for-evidence/paye-settlement-agreements-psas

What does this mean for employers?

Although no immediate changes have been announced, the outcome of this consultation could influence how employee benefits are reported in future and may simplify the PSA process for many businesses.

If your business currently operates a PAYE Settlement Agreement, or you are unsure whether a PSA could be beneficial, it may be worth reviewing your current arrangements.

If you require guidance on PAYE Settlement Agreements, employee benefits, or payroll compliance, schedule a free consultation with Naseems Accountants. We can help you understand your obligations and ensure that your reporting is fully compliant with HMRC requirements.

Mandatory Direct Debit proposed for VAT and PAYE payments

The Government is also consulting on proposals that would require most VAT-registered businesses and employers to pay their VAT and PAYE liabilities by Direct Debit.

The objective is to reduce late payments, improve payment accuracy and simplify tax administration.

What is being proposed?

HMRC believes that many late payments occur because businesses miss payment deadlines or have payments incorrectly allocated, rather than because they cannot afford to pay.

The consultation is seeking views on:

• Why do businesses currently choose payment methods other than Direct Debit?
• The practical impact of making Direct Debit compulsory.
• Situations where exemptions or alternative payment methods may be appropriate.
• Appropriate sanctions for businesses that fail to comply.

Currently, employers with at least 250 employees must already pay PAYE electronically using approved payment methods. The proposal would extend mandatory Direct Debit requirements to a much wider range of businesses.

The consultation closes on 16 August 2026.

You can read the full consultation here:

https://www.gov.uk/government/consultations/requiring-paymentof-vat-and-paye-return-liabilitiesbydirect-debit

What does this mean for businesses?

If these proposals proceed, many businesses may need to review their payment processes, cash flow planning and banking arrangements before the new requirements take effect.

Using Direct Debit could reduce the risk of missed payment deadlines, but businesses should ensure sufficient funds are available on payment dates to avoid penalties or interest charges.

Businesses should continue monitoring announcements from HMRC while these proposals are under consultation.

Final thoughts

Government consultations provide an early indication of the direction of future tax policy. While these proposals are still under review, they highlight HMRC’s continued focus on simplifying tax administration and improving compliance.

Keeping up to date with proposed changes allows businesses to plan ahead and avoid unexpected compliance challenges.

If you have any questions about PAYE Settlement Agreements, VAT, payroll, or any other tax reporting requirements, book a free consultation with Naseems Accountants. Our experienced team is here to provide practical, tailored advice to help your business stay compliant and prepared for future changes.

Funding and support for biotech start-ups

Early-stage biotechnology businesses across the UK have an opportunity to access funding, expert guidance and commercial support through the DeepTech Catalyst Bio programme. Delivered by the Biotechnology and Biological Sciences Research Council (BBSRC) and the Science and Technology Facilities Council (STFC), the programme is designed to help innovative biotech businesses accelerate product development and bring new technologies to market.

What support is available?

Successful applicants will receive a comprehensive package of financial and business support, including:

• £50,000 in research and development (R&D) funding.
• A £10,000 innovation voucher to support additional R&D activities.
• Specialist technical, commercial, business and intellectual property guidance.
• Access to investors, potential customers and industry networks.
• Opportunities to utilise facilities across UK Research and Innovation (UKRI) campuses.

Who can apply?

The programme is open to businesses that meet the following criteria:

• Be registered in the UK.
• Be less than five years old.
• Be majority-owned by the founders and employees.
• Have previously received support from BBSRC, UKRI, Innovate UK, or a UKRI-supported accelerator.

Applicants must also be developing a product or service based on bioscience innovation within BBSRC’s remit. Projects should be beyond the initial concept stage and demonstrate a clear commercial opportunity.

Eligible technologies must be biological in nature, interact with biological systems, or address a biological challenge. Projects focused solely on medical devices, therapeutics or diagnostics are not eligible under this programme.

Application deadline

Businesses interested in applying can find out more and submit an expression of interest via the official programme page:

https://iuk-business-connect.org.uk/opportunities/deeptech-catalyst-bio-2026/: Business News England: July 2026 UK Tax, HMRC & SME Updates

The deadline for expressions of interest is 11:59 pm on 16 August 2026.

What this means for innovative businesses

For eligible biotech start-ups, this programme offers more than just funding. Access to experienced mentors, research facilities, commercial expertise, and investor networks can significantly accelerate business growth and improve the chances of successfully bringing innovative products to market.

Businesses developing new bioscience technologies should review the eligibility criteria carefully and consider whether this programme could support their next stage of growth.

How Naseems Accountants can help

Securing innovation funding is only part of the journey. Businesses also need robust financial planning, budgeting and tax advice to maximise the benefits of grants and R&D investment.

If your business is developing innovative technologies or planning to apply for government-backed funding, Naseems Accountants can help you understand the financial implications, identify available tax reliefs, and ensure your business is well-positioned for sustainable growth.

Contact our team today to discuss how we can support your funding applications, R&D tax planning and long-term business strategy.

New investment announced for former coalfield communities

Former coalfield communities across England, Scotland and Wales are set to benefit from £13.5 million in new government funding to support the construction of industrial developments for local businesses.

The investment, provided through the Government’s Growth Mission Fund, will cover half of the construction costs of new industrial units designed to support Small and Medium-sized Enterprises (SMEs). The remaining funding will be provided by the Coalfields Regeneration Trust, a charity dedicated to creating jobs and driving economic growth in former coalfield areas.

Supporting local businesses and economic growth

The funding aims to help entrepreneurs launch new businesses and enable existing companies to expand within their local communities. By providing modern industrial space, the initiative is expected to encourage investment, create employment opportunities and strengthen regional economies.

Subject to the approval of final business cases, six locations have been identified to receive funding:

• Cowdenbeath (Perth Road): Construction of 51,000 square feet of light industrial units, together with a new substation and 87 parking spaces. The development is expected to create 103 on-site jobs, with many more supported across the local economy.
• St Helens (Robins Lane, Sutton Fold): Development of 32,000 square feet of light industrial space alongside 54 parking spaces, creating an estimated 64 new jobs.
• Thoresby (Thoresby Vale Colliery): A proposed 22,500 square foot industrial development, subject to the completion of the site purchase later this summer.
• Ashington (Ashwood Business Park): Plans for a 49,500 square foot industrial development once the site acquisition is completed, which is expected later this summer.
• Resolven (Vale of Neath Business Park): A proposed 30,000 square foot industrial development, subject to the site purchase and planning approval.
• Seven Sisters (Nant y Cafn Business Park): A planned 45,000 square foot industrial development, also dependent on site acquisition and planning permission.

Long-term investment in local communities

Once completed, the developments are expected to become self-sustaining, with rental income being reinvested into local communities to support further regeneration and economic development.

The initiative forms part of the Government’s wider strategy to encourage regional investment, improve business infrastructure and create sustainable employment opportunities in areas historically affected by the decline of the coal industry.

What this means for businesses

For businesses located in or considering relocating to these areas, the new developments could provide access to modern commercial premises, improved infrastructure, and opportunities to grow alongside other local enterprises.

Business owners planning to expand should monitor the progress of these developments and consider how they may support future investment and operational growth.

How Naseems Accountants can help

Whether you are starting a new business, moving to larger premises, or planning for future investments, Naseems Accountants can offer expert, free advice on business planning, cash flow forecasting, funding opportunities, and tax-efficient growth strategies.

Book a free consultation with our team today to discuss how we can help your business make the most of new investment opportunities and support your long-term success.

Reviewed by Naseems Accountants

Our qualified accountants and business advisers monitor HMRC guidance, Companies House announcements and UK government policy to help businesses stay compliant, minimise tax risks and make informed financial decisions.

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