UK Business News Update 2026: Tax, Compliance, Mortgages, AI & Workplace Changes Explained

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Welcome to our round-up of the latest business news for our clients. If you would like to discuss how any of these updates may impact your business, please don’t hesitate to get in touch. We are here to support you every step of the way.

Table of Contents

Should You Incorporate Your Business?

If you have been running a business for some time, perhaps as a sole trader or in a partnership, you may have heard the advice: “You should incorporate.”

While this is often well-intentioned, incorporation is not always the right choice for every business owner.

Let’s look at the key factors to consider if you are thinking about incorporating your business.

The tax angle

For several years, incorporation was widely regarded as a straightforward means of reducing taxes. Company profits are subject to corporation tax, and extracting income through a combination of salary and dividends often results in a lower overall tax liability compared to sole trader income tax.

However, as we move into the 2026/27 tax year, the position has become more complex. Where most or all profits are withdrawn to cover personal living costs, incorporation may no longer provide a clear tax advantage.

It is therefore essential to review your personal circumstances and long-term goals to understand how incorporation would affect your tax position.

Need clarity on your tax position? Book a free consultation with us for tailored advice based on your income and business structure.

Limited liability

Even where there is no immediate tax saving, limited liability can still be a strong reason to incorporate.

A limited company is a separate legal entity. This means that, in most cases, your personal financial risk is limited to the amount you have invested in the business.

That said, lenders may still request personal guarantees for loans, leases or supplier credit.

Even so, for many businesses, operating through a company provides an important layer of protection.

How the business is perceived

Operating as a limited company can enhance your business’s credibility.

Having a company name and registration number may give your business a more established appearance, which can be beneficial when:

Bidding for contracts
Working with larger organisations
Building trust with new clients

Admin work

Running a company involves additional administrative responsibilities, including:

Filing annual accounts and confirmation statements
Maintaining statutory records
Managing payroll and dividend documentation

Some business owners value the structure this brings, while others find it an added burden.

Paying yourself

As a sole trader, income belongs to you as soon as it is received.

With a limited company, the position is different. The business’s money belongs to the company, and you must extract it correctly. Typically, this involves:

Salary: requiring payroll operation
Dividends: requiring sufficient profits and supporting documentation

This structure can provide flexibility and potential tax efficiency, but it also requires discipline.

You cannot treat the company bank account as your own, and doing so could result in unexpected tax consequences.

Final thoughts

Incorporation can be highly beneficial for some businesses, but it is not a one-size-fits-all solution.

Carefully considering the tax implications, legal protection, administrative requirements and your long-term plans will help you make the right decision.

Thinking about incorporating?
If you would like tailored advice on whether incorporation is right for you, book a free consultation. We would be happy to review your situation and guide you through your options.

Free accounting consultation for business owners

CMA Tackles Fake Reviews

The Competition and Markets Authority (CMA) has launched investigations into five companies as part of a wider effort to tackle fake and misleading online reviews.

The investigations will focus on how reviews are collected, moderated and displayed, as well as how star ratings are calculated, all of which play a significant role in consumer decision-making.

The Legal Position

The Digital Markets, Competition and Consumers Act 2024 has introduced stricter rules in this area.

The Act makes it unlawful to:

Obtain or publish fake reviews.
Use paid-for reviews without clearly disclosing that they are incentivised.
Hide negative reviews
Present misleading star ratings that give an inaccurate impression.

Given the influence that online reviews have on purchasing decisions, these changes are key to maintaining trust and transparency in the marketplace.

Businesses Under Investigation

The CMA is currently investigating the following businesses:

Autotrader and Feefo: examining whether 1-star reviews were withheld and excluded from overall ratings
Dignity: considering whether staff were encouraged to post positive reviews, potentially distorting customer feedback
Just Eat: reviewing whether certain restaurant and grocery ratings were artificially inflated.
Pasta Evangelists: investigating whether customers were offered incentives for 5-star reviews without proper disclosure.

The CMA has made it clear that these investigations do not imply that any laws have been broken at this stage.

Potential Consequences

Where the CMA identifies breaches of consumer law, it has the authority to:

Require businesses to change their practices.
Impose fines of up to 10% of global turnover.

This highlights the importance of ensuring that your business’s review practices are fully compliant.

What Can You Do to Stay Compliant?

If your business relies on online reviews, it is important to follow best practices and remain transparent.

The CMA offers the following guidance to help identify potentially misleading reviews:

Read reviews carefully rather than relying solely on star ratings. Vague or irrelevant comments may indicate inauthentic feedback.
Be aware of AI-generated reviews, which can appear highly polished but lack genuine detail.
Look beyond 5-star ratings: balanced reviews often provide a more realistic picture.
Check multiple platforms to ensure consistency and identify unusual patterns.

Protect your business reputation
Online reviews are a powerful tool, but they must be handled correctly.

Support Confirmed for Mortgages

Following a meeting with the Chancellor of the Exchequer, the UK’s six largest lenders and building societies have committed to proactively contacting 1.6 million customers whose fixed-rate mortgage deals are due to end between now and the end of 2026.

Lenders will outline available options and explain how customers can access tailored support, well in advance of any changes to their payments.

Rising Pressure on Borrowers

Recent geopolitical developments, including the conflict in Iran, have contributed to increases in mortgage rates offered by lenders.

While many businesses and households currently on fixed-rate deals will not be immediately affected, those who are:

Looking to secure new borrowing, or
Approaching the end of an existing deal

may face higher borrowing costs.

Mortgage Charter Reaffirmed

To support borrowers, the Mortgage Charter has been reaffirmed. This sets out how lenders will assist customers who may be facing financial pressure.

Under the Charter, customers have the option to:

Secure a new rate up to six months in advance.
Switch to a new deal with their existing lender without a fresh affordability check.
Move to interest-only payments for up to six months to ease short-term financial pressure.

Importantly, discussions around support measures will not impact credit scores.

Current Market Position

Despite recent increases in rates, lenders report that:

Mortgage lending levels remain relatively stable.
Arrears continue to be low.

This suggests that, while pressures are rising, the market remains resilient for now.

What This Means for You

If your mortgage or business borrowing is due for renewal, it is important to:

Review your options early.
Understand the potential impact of higher rates.
Consider available support measures.

Taking action in advance can help you manage costs and avoid unnecessary financial strain.

Feeling the pressure of rising interest rates?
If increasing borrowing costs are affecting your business or personal finances, book a free consultation. We can help you explore your options and plan the most suitable way forward.

Review of Approved Mileage Rates Promised

The government has confirmed that it will review the approved mileage rates at a future Budget.

These rates are widely used by businesses to reimburse directors and employees for the cost of using their own vehicles for business travel.

Why This Matters

The current HMRC-approved mileage rates have remained unchanged since 2011, despite a significant increase in fuel and motoring costs over that period.

As a result, many businesses and employees may feel that the existing rates no longer accurately reflect the true cost of travel.

What Happens Next?

At present, there is no confirmed timeline for when the review will take place. The government has simply stated that it will be considered in “a future Budget”.

In preparation, it appears that the government intends to engage with individuals and businesses affected by rising motoring costs to better understand the impact.

Current Mileage Rates (Unchanged)

For now, the existing rates remain in place:

Type of vehicle	First 10,000 business miles in the tax year	Each business mile over 10,000 in the tax year
Cars and vans	45p	25p
Motor cycles	24p	24p
Bicycles	20p	20p

What This Means for Your Business

Until any changes are announced, businesses should continue to:

Apply the current HMRC-approved rates.
Ensure reimbursement policies are consistent and compliant.
Keep accurate mileage records for all business travel.

Are your expense policies up to date?
If you would like help reviewing your mileage claims, expense processes, or ensuring compliance with HMRC guidance, please get in touch with us today. We would be happy to assist.

Is Vibe Coding the Future?

The National Cyber Security Centre (NCSC) has published a blog exploring whether ‘vibe coding’ could eventually challenge the Software-as-a-Service (SaaS) model.

While it is not suggesting that this shift is imminent, the NCSC notes that vibe coding may be following a similar trajectory to cloud computing adoption 20 years ago.

What is Vibe Coding?

Vibe coding refers to the use of Artificial Intelligence (AI) to generate computer code, often with minimal or no human review.

At present, this approach has limitations:

AI-generated code can be unreliable or difficult to maintain
It may contain errors or security vulnerabilities.
It is not well-suited to those with little technical knowledge.

However, experienced developers are increasingly using AI tools to enhance productivity, allowing them to build and test solutions more quickly.

How Have We Reached This Point?

Traditionally, businesses installed and maintained software on their own systems, which required:

Ongoing maintenance
Manual updates
Internal infrastructure

The introduction of cloud computing and SaaS transformed this model. Businesses now:

Access software via the internet
Receive automatic updates
Avoid managing infrastructure

Common SaaS tools include:

Accounting platforms such as Sage, Xero and QuickBooks
Project management tools like Trello, Jira and Monday
Productivity tools such as Google Docs

While convenient, SaaS can present challenges, including:

Ongoing subscription costs
Limited customisation
Data security considerations

As a result, some businesses are exploring whether vibe coding could allow them to build tailored, cost-effective solutions in-house.

What Could the Future Look Like?

Despite its potential, vibe coding raises important concerns:

Security risks if the code is not properly reviewed.
Maintenance challenges over time.
Lack of accountability for AI-generated outputs.

These issues will need to be addressed before wider adoption becomes viable.

The NCSC is not advocating for the immediate use of vibe coding, and the risks remain significant. However, it is clear that this is an area to watch as technology continues to evolve.

Mental Health: A Key Reason for Sickness Absence

A recent YouGov survey commissioned by Acas shows that nearly one in three employers report stress, anxiety, depression, or other mental health issues as a cause of sickness absence.

While minor illnesses such as colds and flu remain the most common reason for absence, mental health is becoming an increasingly significant factor for employers to address.

Changes to Statutory Sick Pay

The Employment Rights Act 2025 introduces new rules from 6 April 2026:

Statutory sick pay (SSP) will be payable from the first day of illness, rather than the fourth.
The minimum earnings threshold for eligibility will be removed.

These changes are likely to increase employer costs and administrative considerations.

Managing Sickness Absence

Acas recommends several practical steps for employers:

Provide training for managers to support employees during illness.
Offer flexible working arrangements.
Implement processes to resolve workplace issues.
Maintain clear and accessible absence policies.

Taking a proactive approach can help reduce absence levels and support employee well-being.

Preparing for the new rules?
Changes to sick pay and rising absence levels can have a direct impact on your business.

If you would like help reviewing your policies, understanding the cost implications or planning ahead, please get in touch with us today. We are here to support you.

FAQ’s

1. Should I incorporate my business in the UK in 2026?

It depends on your profits, personal income needs and long-term goals. Incorporation can offer tax efficiency and limited liability, but it is not always the best option for every business.

2. What are the benefits of operating as a limited company?

Key benefits include limited liability protection, potential tax planning opportunities, and increased business credibility.

3. What are the new rules on fake reviews in the UK?

The Digital Markets, Competition and Consumers Act 2024 makes it illegal to post fake reviews, hide negative feedback, or use undisclosed paid reviews.

4. How will mortgage changes affect businesses in 2026?

Rising interest rates may increase borrowing costs. However, support measures under the Mortgage Charter allow flexibility, such as switching deals or temporary interest-only payments.

5. Are HMRC mileage rates changing?

The government has confirmed a review is planned, but no changes have been announced yet. Current rates remain in place.

6. What is vibe coding in simple terms?

Vibe coding is the use of AI to generate code with minimal human input. While it can improve productivity, it currently carries risks around security and reliability.

7. What are the new sick pay rules in 2026?

From April 2026, statutory sick pay will be available from day one of illness, and the minimum earnings threshold will be removed.