Summer 2026 Tax Updates: 7 Changes Business Owners Need to Know

Temporary VAT cut for family days out

The Government has announced the Great British Summer Savings scheme for summer 2026.

From 25 June 2026 to 1 September 2026, a temporary reduced VAT rate of 5% applies to certain qualifying family activities.

This includes qualifying children’s meals and admission to certain family attractions, with the Government saying the measure is intended to help reduce the cost of summer days out.

For customers, this can mean cheaper family days out where businesses choose to pass on the VAT saving.

For businesses, the opportunity comes with a practical warning: VAT systems, till programming, invoices, price lists and accounting records may all need updating twice in a short period — once when the reduced rate starts and again when it ends.

This is an area where errors could easily arise.

Businesses should keep clear records showing which sales qualify for the temporary 5% rate and which remain subject to the normal VAT treatment.

Merranti’s guide to managing changes in VAT rates and schemes provides further information on VAT compliance and record keeping.

Mileage allowance finally increases

For employees and directors using their own car or van for business journeys, HMRC has updated the approved mileage rates for 2026/27.

For cars and vans, the approved rate increases to 55p per mile for the first 10,000 business miles in the tax year, with the rate over 10,000 miles remaining at 25p per mile.

The previous car and van rate had been 45p per mile for the first 10,000 miles from 2011 to 2026.

This is particularly relevant for owner-managed companies where directors regularly use their own cars for business travel.

Paying mileage at or below the approved rate can generally be done without creating additional taxable mileage payments, provided the journeys qualify as business journeys and proper records are kept.

Good records should include the date, destination, reason for the journey and number of business miles travelled.

More information from company directors

HMRC is collecting more information from directors and shareholders in owner-managed companies.

For directors of close companies completing Self Assessment returns, this includes additional information about directorships, dividends received from their own companies and shareholdings.

That makes accurate records around dividends, salary, benefits, loans and other amounts extracted from the company increasingly important.

This also reinforces the importance of keeping dividend paperwork clean, including board minutes, dividend vouchers and confirmation that dividends are paid from distributable profits.

Merranti’s guide to properly documenting dividends in a limited company explains the records directors should maintain.

For directors, the practical message is clear: dividend planning still has a place, but the reporting and supporting documentation need to be accurate.

R&D tax relief: new advance assurance option

R&D tax relief remains valuable for qualifying companies, but HMRC scrutiny of claims has increased.

A useful development for SMEs is HMRC’s targeted advance assurance process.

Eligible SMEs can apply for advance assurance on up to two specific complex or higher-risk areas of an R&D tax relief claim.

This could be particularly useful where a business is unsure about the treatment of an area of a project or a particular category of qualifying expenditure.

For companies working on innovative projects, this may be a good time to review how R&D claims are prepared.

The strongest claims are usually supported by:

• Clear project descriptions.
• Evidence of the scientific or technological uncertainty.
• An explanation of how the project attempted to resolve that uncertainty.
• A proper breakdown of qualifying costs.

Merranti’s guide to R&D compliance and advance assurance provides further information on preparing robust R&D claims.

Cryptoassets: more reporting and more transparency

Cryptoassets continue to attract HMRC attention.

The UK has implemented the Cryptoasset Reporting Framework, which is designed to give tax authorities greater visibility over cryptoasset transactions.

From 1 January 2026, UK reporting cryptoasset service providers have been required to collect specified information about users and transactions.

Relevant information for the 2026 calendar year will then be reported to HMRC, with the first reporting window running in 2027.

For individuals, this does not mean crypto gains have suddenly become taxable.

Cryptoasset gains and income were already potentially taxable depending on the circumstances.

What is changing is the amount of transaction information HMRC is likely to receive.

Anyone buying, selling, swapping or earning from cryptoassets should make sure they have full transaction records and understand whether they have Income Tax or Capital Gains Tax reporting obligations.

Making Tax Digital is now underway

Making Tax Digital for Income Tax is now a live requirement for the first group of affected landlords and self-employed individuals.

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 are required to use Making Tax Digital for Income Tax, subject to the detailed eligibility and exemption rules.

The threshold is due to extend to those with qualifying income over £30,000 from April 2027 and over £20,000 from April 2028.

Affected taxpayers need to:

• Keep digital records.
• Use compatible software.
• Submit quarterly updates to HMRC.
• Complete their year-end tax return through compatible software.

This is not just a software change.

It changes how regularly business and property records need to be maintained.

Merranti’s Making Tax Digital guide for sole traders and landlords explains who is affected and what needs to be done.

Capital allowances: check before assuming relief is available

Recent developments involving capital allowances have highlighted the treatment of pre-development expenditure, including certain surveys and professional costs.

The wider lesson is important: not every cost incurred before a project begins will automatically qualify for the capital allowance treatment a business expects.

Professional fees such as survey, architect or engineering costs may qualify for plant and machinery allowances where they relate directly to the acquisition, transport or installation of qualifying plant or machinery.

Other preliminary or feasibility expenditure may not qualify in the same way.

This is particularly relevant for property projects, construction, renewable energy and green technology businesses.

Before committing to major spending, it is worth checking whether costs qualify for:

• Plant and machinery allowances.
• Structures and Buildings Allowance.
• A revenue deduction.
• Another form of tax relief.
• No immediate tax relief.

The tax treatment can depend heavily on exactly what the expenditure relates to.

What should business owners do now?

VAT-registered hospitality and leisure businesses affected by the Great British Summer Savings scheme should make sure qualifying sales are being treated correctly during the temporary 5% VAT period and that systems are ready to revert after 1 September 2026.

Employers and directors should update mileage reimbursement policies for 2026/27 where appropriate and keep proper mileage records.

Company directors should make sure dividend paperwork and Self Assessment reporting are accurate.

R&D claimants should consider whether targeted advance assurance could reduce uncertainty around complex areas of a claim.

Crypto investors and platforms should keep complete records and prepare for greater HMRC transparency.

Landlords and sole traders should check whether they are already within Making Tax Digital and ensure their bookkeeping and software meet the new requirements.

Final thought

Some of the summer changes are genuinely helpful, particularly the temporary VAT reduction and increased mileage allowance.

But the wider direction is also clear: HMRC is receiving more data, requiring more regular reporting and expecting stronger supporting records.

For businesses, that means tax planning and compliance need to work together.

The tax reliefs and allowances are worth using where available, but the paperwork needs to be strong enough to support them.

If you are unsure how any of these changes affect you or your business, Merranti Accounting can help you understand the rules and what action may be required.

Frequently Asked Questions

What is the Great British Summer Savings scheme?

It is a temporary VAT reduction for summer 2026.

From 25 June 2026 to 1 September 2026, certain qualifying children’s meals, family tickets and admission to eligible attractions can benefit from a reduced 5% VAT rate.

What is the mileage allowance for 2026/27?

For cars and vans, the approved mileage rate for 2026/27 is 55p per mile for the first 10,000 business miles and 25p per mile after that.

Are company directors facing more HMRC reporting?

Owner-managers completing Self Assessment may need to provide additional information about their close-company directorships, dividends received from their own companies and shareholdings.

Directors should therefore maintain clear records for salary, dividends, benefits, loans and other amounts taken from the company.

Can SMEs get R&D clearance from HMRC?

Eligible SMEs can apply for targeted advance assurance on specific areas of an R&D tax relief claim.

HMRC’s targeted process allows up to two applications covering qualifying areas, subject to the eligibility conditions.

Are cryptoassets taxable in the UK?

Cryptoasset gains and income can already be taxable depending on the circumstances.

The Cryptoasset Reporting Framework increases the information collected and reported by cryptoasset service providers, giving HMRC greater visibility over transactions.

Has Making Tax Digital already started?

Yes.

Making Tax Digital for Income Tax became mandatory from 6 April 2026 for qualifying sole traders and landlords with income over £50,000, subject to the relevant rules and exemptions.

Written by Steve Watts ACMA

Steve Watts is Accounting Director at Merranti Accounting and a Chartered Management Accountant.

Steve qualified as a CIMA accountant in 1995 and has more than 20 years of commercial finance and accounting experience.

His background includes housebuilding, serviced accommodation, property investment and development, joint ventures and wider commercial finance.

At Merranti Accounting, Steve supports business owners with Corporation Tax, VAT, management accounts, payroll, tax returns, financial strategy and business planning.

Steve’s approach focuses on helping business owners understand how tax changes affect their day-to-day decisions rather than viewing tax purely as a year-end compliance exercise.

With changes affecting VAT, mileage, company directors, R&D, cryptoassets and Making Tax Digital during 2026, accurate records and early planning are increasingly important.

Read more about Steve Watts and his experience or connect with Steve on LinkedIn.