Business News England | UK Business, Tax & Compliance Updates 2026

This summary provides recent UK business news and updates.

This edition highlights key changes in legislation, taxation, and economic trends relevant to business owners, employers, landlords, and individuals.

If you would like to discuss how these developments may affect your business or personal finances, contact Naseems Accountants. We will review your situation and recommend tailored actions to help you navigate these changes.

Temporary VAT Reduction on Children’s Meals, Tickets and Family Attractions

The Government has announced a temporary VAT reduction on qualifying children’s meals and family leisure activities for the summer period.

From 25 June to 1 September 2026, VAT will be reduced from 20% to 5% on certain eligible goods and services. This measure aims to ease household budgets and encourage spending in the tourism, hospitality, and leisure sectors. To check if your offerings qualify for the reduced VAT rate, review HMRC guidance on the relevant criteria or book a free consultation with Naseems Accountants for specific advice. If you are unsure about eligibility, our experts can help you determine which products and services are covered by the temporary relief.

The VAT reduction applies across England, Scotland, Wales, and Northern Ireland. Additionally, children aged 5 to 15 in England will receive free bus travel throughout August.

The relief period aligns with school summer holidays, starting with the Scottish break on 25 June and ending on 1 September, when schools in England, Wales, and Northern Ireland resume.

Which Services Qualify for the Reduced VAT Rate?

The temporary 5% VAT rate will apply to:

• Children’s meals served and consumed on-site from a dedicated, clearly marketed children’s menu.
• Family and children’s tickets for cinemas, theatres, exhibitions, concerts, and live shows.
• Admission tickets for children and adults to attractions such as:
  • Amusement parks
  • Fairs and circuses
  • Museums
  • Zoos
  • Adventure parks
  • Soft play centres
  • Observation attractions

Takeaway meals and sporting activities are not eligible for the reduced rate.

How Will the Reduced Rate Apply to Season Tickets and Advance Bookings?

Season tickets allowing repeat visits during the relief period generally qualify for the reduced VAT rate.

If a season ticket also allows entry before 25 June or after 1 September, it will not qualify unless priced the same as a standard single-entry ticket.

The reduced rate also applies to advance and prepaid bookings if the admission or activity occurs during the qualifying period, including bookings made before the announcement.

If businesses have already accounted for VAT at the standard rate on qualifying sales, they can adjust a future VAT return to recover overpaid VAT. The Government expects businesses to pass these savings on to customers where possible.

How Should Businesses Pass On the Savings?

The Government expects eligible businesses to pass on the VAT reduction through lower consumer prices.

Many businesses may need to update:

• Till systems
• Accounting software
• Websites and online booking platforms
• Marketing materials and signage
• Pricing structures

Although implementing these changes may require administrative work, businesses could benefit from increased customer demand and higher visitor numbers during the summer. To maximise the benefit and avoid confusion, consider updating signage, menus, websites, and promotional materials to clearly communicate the new pricing. Brief staff with simple scripts or FAQs so they can confidently explain the temporary VAT reduction to customers and answer any questions.

What Should Businesses Do Now?

If your business operates in hospitality, tourism, or leisure, review how the temporary VAT reduction applies to your services.

Consider taking the following steps:

• Identify which products and services qualify for the reduced rate.
• Update pricing and VAT settings within your systems.
• Review advance bookings that may be eligible.
• Ensure staff understand the changes and can answer customer queries.
• Check HMRC guidance for any sector-specific rules.

If you need help applying the temporary VAT reduction, book a free consultation with Naseems Accountants. We will explain the rules, assist with VAT updates, and support you through each compliance step.

Naseems Accountants can help you understand the rules, update your VAT processes, and ensure HMRC compliance.

Final Thoughts

The temporary VAT reduction gives eligible businesses an opportunity to attract more customers and helps families manage the costs of summer activities.

Businesses should ensure they understand which supplies qualify and how to apply the relief to avoid VAT errors and compliance issues.

Tax-free mileage rate increases by 10p per mile

The Chancellor has announced a 10p per mile increase to the tax-free mileage rate for the first 10,000 business miles in a car or van each tax year.

The increase is backdated to April 2026, so the approved mileage rates for the 2026/27 tax year are now as follows:

Cars and vans include electric, hybrid, petrol, and diesel models.

What does this mean for employers?

These approved mileage rates let employers reimburse employees for business travel without tax or National Insurance liability, as long as payments do not exceed the approved rates.

The increase may help employees offset rising motoring costs and allow businesses to continue tax-efficient reimbursement for business travel.

What does this mean for the self-employed?

Self-employed individuals can also benefit. Instead of calculating actual vehicle running costs and apportioning them, eligible taxpayers can claim a deduction based on business mileage.

To use this method, maintain an accurate mileage log of all qualifying business journeys.

Important conditions to be aware of

The approved mileage rates can only be used where:

• Capital allowances have not been claimed on the vehicle.
• The cost of the vehicle has not been deducted under the cash basis rules.
• Appropriate mileage records are maintained.

If either capital allowances or vehicle costs have already been claimed under an alternative method, the mileage rate scheme may not be available.

Planning ahead

With the increased rate applying from April 2026, businesses should review mileage reimbursement policies and records to ensure correct claims.

Accurate record-keeping is essential for employers reimbursing staff and self-employed individuals claiming business mileage expenses.

Need help with mileage claims or business expenses?

If you need advice on mileage allowances, employee expense reimbursements, or claiming business expenses, book a free consultation with our expert accountants. We will review your circumstances and help you use the most tax-efficient approach while ensuring HMRC compliance.

Fit note system to be overhauled

The government has launched four pilot schemes as part of broader plans to reform the UK fit note system for employees off work due to illness.

The pilots will run for up to 12 months, covering about 100,000 appointments. They will test alternative approaches to replace the current fit note process with more personalised “stay in work” and “return to work” support plans.

Government data shows only three in ten primary care professionals view issuing fit notes as a productive use of GP time. Six in ten employers believe the current system does not effectively support employees’ health and work needs.

What the pilots will be involved in

During the pilot phase, patients may experience one of two pathways:

• Receiving an initial fit note from a GP followed by referral to community health workers, or
• Receiving support directly from a dedicated service of clinical and non-clinical professionals, without an initial GP-issued fit note.

Support may include coordinated discussions among patients, employers, and professionals to explore workplace adjustments and help individuals stay connected to their jobs where possible.

The pilot areas include:

• Birmingham and Solihull
• Coventry and Warwickshire
• Cornwall and the Isles of Scilly
• Lancashire and South Cumbria

Findings from these trials will be used to shape future policy and potential legislation relating to workplace health and the fit note system.

What this means for employers

If implemented nationally, these reforms could significantly change how employers manage long-term sickness absence. The impact may be felt more strongly in sectors with higher rates of employee illness or physically demanding roles, such as manufacturing, healthcare, construction, and retail, where tailored return-to-work planning is often crucial. Smaller businesses may face additional administrative challenges in adapting to new procedures, while larger organisations may need to coordinate across multiple sites. Overall, businesses may see more structured return-to-work planning and greater emphasis on early intervention and workplace adjustments.

If your business manages staff absences or occupational health, book a free consultation with Naseems Accountants. We can assess your procedures and help reduce the financial and administrative impact of workforce disruption while improving HR and payroll planning.

Late payment legislation was laid before Parliament.

Following reference in the King’s Speech, the Small Business Protections Bill has now been formally presented to Parliament.

The proposed legislation aims to address persistent late payment issues affecting smaller businesses across the UK.

Key measures in the Bill

The Bill includes several significant reforms, including:

• A maximum 60-day payment term for large businesses paying small suppliers
• Mandatory interest on late payments, set at 8% above the Bank of England base rate
• A ban on withholding retention payments in construction contracts
• Enhanced powers for the Small Business Commissioner to investigate poor payment practices, mediate disputes, and issue fines to persistent late payers.
• Requirements for large companies to report on late payment performance and explain steps taken to improve

What this means for small businesses

If enacted, these measures could significantly improve cash flow stability for small and medium-sized enterprises. Late payment is a common cause of financial pressure for smaller businesses, especially in supply chains dominated by larger organisations.

Stronger enforcement and clearer reporting requirements may help create a fairer payment culture and reduce financial uncertainty.

If late payments are affecting your business cash flow, book a free advice session with our expert accountants to help you put stronger credit control systems in place, improve debtor management, and strengthen your financial forecasting.

Final thoughts

The fit note reforms and proposed late payment legislation reflect a broader shift toward improving workplace efficiency, employee wellbeing, and business cash flow resilience.

While these changes are in development, businesses should consider how they may affect operations, staffing, and financial planning.

If you would like tailored advice on cash flow management, payroll, or business planning, book a free advice session with Naseems Accountants. We are here to support you with clear, practical guidance to help your business stay prepared for change.

ICO reports on potential changes to online advertising

The Information Commissioner’s Office (ICO) has published findings on how current consent requirements under the Privacy and Electronic Communications Regulations (PECR) may affect businesses’ ability to use more privacy-friendly online advertising.

PECR, alongside the UK General Data Protection Regulation (UK GDPR), is designed to protect individuals’ privacy when using digital services. In practice, this means websites must obtain consent before placing or accessing cookies, scripts, or similar tracking technologies for advertising purposes.

The ICO notes that the current framework applies consent requirements broadly, regardless of privacy risk, creating challenges for organisations seeking less intrusive advertising methods.

How the rules may change

The ICO has suggested there may be scope to differentiate between types of online advertising based on their privacy risk levels.

In particular:

• Lower-risk advertising, such as ads based on the content a user is currently viewing, may require less stringent consent requirements.
• Higher-risk practices, such as profiling users based on their browsing history or tracking behaviour across websites, would continue to require explicit consent.

This approach could let businesses adopt more privacy-conscious advertising while still protecting users from intrusive tracking.

The government is considering these findings, which may influence future regulatory updates.

What this means for businesses

No changes have been made to the existing rules. Businesses must continue to comply with current PECR and UK GDPR requirements, including obtaining valid consent where necessary.

However, the ICO’s review suggests future regulatory changes may better balance effective digital advertising and user privacy.

If your business uses online advertising, cookies, or digital marketing tools, you must understand the compliance implications and ensure your data practices align with current regulations.

New guidance recommends starting small with agentic AI.

The National Cyber Security Centre (NCSC), with international partners, has issued new guidance on using agentic artificial intelligence (AI), along with a supporting blog outlining key considerations.

Agentic AI is an emerging stage of AI development where systems act autonomously to achieve objectives, planning, making decisions, and executing actions with minimal human input.

For example, an agentic AI could be tasked with booking a holiday within a set budget. It may then independently search for flights, compare options, check availability, and complete the booking process.

While this capability offers efficiency benefits, it also introduces new risks. A single decision-making error could cause unintended outcomes quickly and at scale.

Key guidance from the NCSC

The NCSC advises organisations to adopt agentic AI cautiously and prioritise security from the outset. Key recommendations include:

• Understanding the increased risks associated with autonomous AI systems
• Introducing agentic AI gradually, starting with low-risk use cases
• Embedding security considerations throughout development and deployment
• Ensuring clear human oversight and accountability
• Applying established cybersecurity best practices

This guidance is especially relevant for businesses exploring automation, AI-driven workflows, or advanced digital tools.

What this means for businesses

As AI evolves, businesses may face new opportunities and risks. Agentic AI could improve efficiency and decision-making but requires stronger governance, oversight, and risk management. As a practical first step, consider identifying a straightforward, low-risk business process where you can safely pilot agentic AI under close supervision. This approach allows your team to gain experience and confidence while clearly defining boundaries and outcomes before expanding use.

The blog is available on the NCSC’s website here, and the full joint guidance is available here.

Companies House and the IPO warn about fake payment requests.

Companies House and the Intellectual Property Office (IPO) have warned businesses about fraudulent organisations sending misleading payment requests.

These scams often involve official-looking invoices or letters requesting payment for services related to Companies House or IPO functions. Documents may be sent to a company’s registered office or delivered by email.

These invoices often request payment for services that are significantly cheaper or free when accessed directly through official channels.

Common types of misleading requests

Businesses have reported receiving requests for payment relating to:

• Setting up or claiming a Companies House online account
• Authenticating or verifying a Companies House account
• Renewing a trade mark or listing it on an “exclusive online register”

These requests are designed to appear legitimate but are not connected to official government services.

How to identify potential scams

Companies House and the IPO advise businesses to take extra care with unexpected payment requests. If there is any doubt about an invoice’s legitimacy, businesses should:

• Check whether the website or email address is hosted on an official GOV.UK domain
• Look for disclaimers stating that the organisation is not affiliated with the UK government.
• Contact Companies House or the IPO directly to verify the request.

Official contact details for both organisations are available on GOV.UK.

What this means for businesses

Fraudulent payment requests can cause unnecessary costs and may lead to sensitive business information being shared with unauthorised organisations. Staff responsible for finance and administration should be aware of these scams and know how to verify suspicious correspondence.

To strengthen protection, consider implementing a simple internal checklist or approval process for all payment requests, such as requiring a second staff member to review and authorise payments before processing. This helps reduce the risk of fraud and reassures business owners that appropriate controls are in place.

If you are unsure about any Companies House filings, fees, or official correspondence, Naseems Accountants can help you verify requirements and ensure your business only pays legitimate statutory charges.

For support with company compliance, filings, or business administration, book a free consultation. We are here to help you stay protected and compliant.