June business update: Great British Summer Savings, mileage rates, dividends, R&D tax relief and late payment reforms
As experienced chartered accountants in Birmingham, Barnett Ravenscroft supports businesses, company directors, employers, landlords, self-employed individuals and family businesses with clear, practical tax and accounting advice.
In this June business update, we cover a number of important developments affecting UK businesses and taxpayers. These include the new Great British Summer Savings package, the increase in tax-free mileage rates, a temporary reduced rate of VAT for certain family-focused activities, new dividend reporting requirements on the 2025/26 Self Assessment tax return, changes to Research and Development tax relief assurance, fit note reform and new late payment legislation.
For anyone looking for accountants in Birmingham, Birmingham accountants, Edgbaston accountants, chartered accountants in Birmingham, family business advisors or Birmingham business advisors, these updates are particularly relevant. Many of the changes affect owner-managed businesses, close companies, SMEs, employers, directors and individuals who need proactive tax planning and reliable compliance support.
Great British Summer Savings
On 21 May 2026, the Chancellor, Rachel Reeves MP, announced Great British Summer Savings, a package of measures aimed at cutting costs for families, particularly those with children.
While some of the measures are aimed directly at households, two updates are especially important for businesses, employers and the self-employed:
the increase in tax-free mileage rates; and
the temporary reduced rate of VAT for eligible children’s activities and admissions.
These changes may affect how employers reimburse staff, how the self-employed calculate business mileage, and how certain hospitality, leisure, entertainment and attraction businesses apply VAT during the summer period.
As Birmingham accountants supporting local businesses, employers and family businesses, we recommend reviewing these changes carefully to ensure the correct rates are used and the VAT position is properly understood.
Tax-free mileage rates increase for 2026/27
A 10p per mile increase in tax-free mileage rates will apply in the 2026/27 tax year, backdated to April 2026. The increase relates to the amount per business mile driven that attracts tax relief and affects both employees and the self-employed.
HMRC’s mileage rates guidance has been updated as follows.
Mileage rates for the self-employed
For self-employed individuals, the updated flat rate mileage rates are:
Cars and goods vehicles - first 10,000 miles
Flat rate per mile for 2026/27: 55p
Flat rate per mile before 6 April 2026: 45p
Cars and goods vehicles - after 10,000 miles
Flat rate per mile for 2026/27: 25p
Flat rate per mile before 6 April 2026: 25p
Motorbikes
Flat rate per mile for 2026/27: 24p
Flat rate per mile before 6 April 2026: 24p
This change will be particularly relevant to sole traders, consultants, tradespeople, landlords and self-employed business owners who use their own vehicle for business travel.
If you are self-employed and looking for an accountant in Birmingham to help with mileage claims, tax deductible expenses, bookkeeping or Self Assessment, this is a useful time to review how your business mileage is being recorded.
Mileage rates for employees
For employees, the updated flat rate mileage rates are:
Cars and vans - first 10,000 miles
Flat rate per mile for 2026/27: 55p
Flat rate per mile before 6 April 2026: 45p
Cars and vans - after 10,000 miles
Flat rate per mile for 2026/27: 25p
Flat rate per mile before 6 April 2026: 25p
Motorbikes
Flat rate per mile for 2026/27: 24p
Flat rate per mile before 6 April 2026: 24p
Bicycles
Flat rate per mile for 2026/27: 20p
Flat rate per mile before 6 April 2026: 20p
Only the rate for cars and vans for the first 10,000 miles has increased. The other rates remain unchanged.
For employers, this may affect payroll policies, staff expense claims, mileage reimbursement procedures and employee communications. Businesses should make sure their finance systems, payroll teams and expense claim processes are updated to reflect the new rates.
As business accountants in Birmingham, we regularly help employers review payroll, employee benefits, travel expenses and tax-free reimbursements to ensure they are compliant and tax-efficient.
Temporary reduced rate of VAT
From 25 June to 1 September 2026, the 5% reduced rate of VAT will apply to certain eligible activities.
This temporary VAT reduction applies to:
children’s meals;
children’s cinema, theatre, show and concert admission tickets; and
admission to qualifying attractions that are suitable for children.
For children’s meals to qualify for the reduced rate, the meal:
must be held out for sale as a meal for children;
must be a supply of catering by a restaurant, café or similar establishment and consumed on the premises;
must not be takeaway food; and
can include drinks.
The reduced rate also applies to children’s cinema, theatre, show and concert admission tickets.
Admission to qualifying attractions that are suitable for children can also benefit. This includes amusement parks, museums, heritage sites, zoos and soft play areas. The reduced rate applies to all admissions, regardless of the customer’s age.
This VAT change could be particularly relevant to restaurants, cafés, visitor attractions, soft play centres, museums, entertainment venues, theatres, cinemas and family leisure businesses.
For businesses in Birmingham and the West Midlands, this is a good opportunity to review pricing, VAT coding, till systems, bookkeeping software and invoicing processes. VAT errors can be costly, so it is important to ensure that the reduced rate is applied only where the eligibility conditions are met.
If you would like to know more about these measures, please get in touch. As VAT accountants in Birmingham, we can discuss how they may affect you and your business.
Dividends on the 2025/26 Self Assessment tax return
For taxpayers required to submit a Self Assessment tax return, new boxes on the 2025/26 employment page will require additional information for each directorship held by an individual.
The new reporting requirements will include:
if the company was a close company;
the company’s name and registration number;
dividends the taxpayer received from the close company during the tax year; and
the highest percentage shareholding that the taxpayer held during the tax year.
A penalty of £60 may apply for failing to provide the required information. It is therefore important that you notify us of each directorship that you held during the year.
This is part of a wider trend of HMRC increasing scrutiny of close companies, dividends and director-shareholder transactions. For owner-managed businesses, directors and family companies, dividend paperwork and procedures need to be properly managed.
In light of HMRC’s recent scrutiny of close company dividends, it will be wise to make sure that dividend procedures are tight, lawful and compliant.
This means ensuring that:
the company has sufficient distributable profits before dividends are declared;
dividend vouchers are prepared;
board minutes are retained;
director loan accounts are reviewed;
salary and dividend extraction is considered as part of wider tax planning; and
company records support the dividend payments reported on the personal tax return.
For company directors looking for dividend tax advice in Birmingham, or for Birmingham accountants who can review director remuneration and profit extraction, this is an important area to address early.
Please do contact us if we can assist in this regard.
Research and Development: an update
New R&D targeted advance assurance scheme
HMRC have introduced a targeted advance assurance service for Research and Development (R&D) tax relief claims.
The service, which is a pilot, aims to provide Small and Medium-sized Enterprises (SMEs) with clarity on complex or high-risk areas before a claim is made.
The new targeted scheme is open to any SME wishing to obtain HMRC’s assurance in any of the following areas:
whether the project meets the definition of R&D for tax purposes;
whether overseas expenditure qualifies for relief;
whether the company can claim R&D relief where work is contracted by one company to another; and
whether the company qualifies for exemption from the PAYE and National Insurance contributions cap.
The scheme will run alongside the existing full claim advance assurance service, which is only available to first-time claimants.
This is a useful development for companies undertaking innovation, product development, technical problem-solving, software development, engineering work or process improvement.
R&D tax relief has been an area of increased HMRC attention in recent years, so getting clarity before a claim is submitted may help reduce uncertainty.
For SMEs looking for R&D tax relief advice in Birmingham, this pilot scheme may provide an opportunity to confirm the treatment of more complex claims in advance. As chartered accountants in Birmingham, Barnett Ravenscroft can help businesses understand whether a project may qualify, what evidence should be retained, and how to approach R&D tax relief carefully and compliantly.
Fit note system to be overhauled
The government has launched four new pilots as it looks for the best way to reform the fit note system for workers who fall ill.
The pilots will last up to a year and cover up to 100,000 appointments. A variety of methods are being explored so that the current fit note system will eventually be replaced by personalised ‘stay in work’ and ‘return to work’ plans.
According to published government information, only three out of ten Healthcare Professionals in Primary Care consider fit notes to be a good use of GPs time. Six in ten employers think the current process is ineffective at supporting their employees’ work and health needs.
During the pilots, patients will be offered either an initial fit note from a GP and then referred to community health workers or will instead be supported by a separate service staffed by clinical and non-clinical practitioners without an initial fit note from a GP.
A range of work and health support will be provided. This could include three-way conversations between patients, employers, and trained professionals that cover reasonable adjustments and keep people connected to their workplace.
The areas covered by the new pilots are:
Birmingham and Solihull;
Coventry and Warwickshire;
Cornwall and the Isles of Scilly; and
Lancashire and South Cumbria.
Findings from the pilots will inform decisions and legislation for reforming the fit note system.
For employers, this is worth watching closely. Changes to the fit note system may affect absence management, HR processes, payroll records, Statutory Sick Pay, workplace adjustments and return-to-work planning.
For local businesses, the fact that Birmingham and Solihull are included in the pilot areas makes this especially relevant. Employers in the region may want to keep an eye on how these reforms develop and consider whether their absence management procedures are fit for purpose.
As Birmingham business advisors, we can help employers think about the financial and payroll implications of staff absence, sick pay, workforce planning and compliance.
Late payment legislation laid before Parliament
Following its mention in the King’s Speech, the Small Business Protections Bill has now been put before Parliament.
The Bill introduces measures that are designed to help alleviate some of the difficulties smaller businesses face in getting paid.
These include:
a 60-day cap on payment terms for large businesses paying small suppliers;
mandatory interest on late payments, set at 8% above the Bank of England base rate;
a prohibition on withholding retention payments in construction contacts;
new powers for the Small Business Commissioner to investigate businesses that have poor payment practices, arbitrate in disputes and fine persistent late payers; and
a requirement for the boards or audit committees of large companies to publish explanations of late payment performance and what steps are being taken to improve.
Smaller businesses will be keenly watching the Bill’s progress through its Parliamentary processes to see when these measures will come into force.
Late payment can place significant pressure on cash flow, especially for SMEs, family businesses and owner-managed companies. Even profitable businesses can struggle if customers take too long to pay.
For small businesses, late payment can affect:
cash flow;
supplier payments;
wages;
tax payments;
investment decisions;
borrowing needs; and
business confidence.
This is why credit control, clear payment terms, regular debtor reviews and good cash flow forecasting are so important.
As family business advisors in Birmingham, Barnett Ravenscroft works with businesses to improve financial visibility, strengthen cash flow management and plan for sustainable growth. If late payments are affecting your business, it may be worth reviewing your invoicing process, payment terms, debtor management and forecasting.
Why this June business update matters
This month’s updates highlight a number of areas where businesses, directors, employers and self-employed individuals may need to take action.
The increase in mileage rates may affect employee expenses and self-employed tax claims.
The temporary reduced rate of VAT may affect businesses in hospitality, leisure, attractions and family entertainment.
The new dividend reporting requirements mean company directors need to be clear about close company dividends, shareholdings and directorships.
The R&D targeted advance assurance scheme may help SMEs dealing with complex or high-risk R&D claims.
The fit note pilots could reshape how employers manage sickness absence and return-to-work support.
The late payment legislation may eventually provide additional protection for smaller businesses dealing with slow-paying larger customers.
For businesses looking for accountants in Birmingham, Birmingham accountants, Edgbaston accountants, chartered accountants in Birmingham, family business advisors, or Birmingham business advisors, these updates show the importance of proactive, year-round advice.
Need advice from Birmingham accountants?
Barnett Ravenscroft Chartered Accountants, based in Edgbaston, Birmingham, provides practical tax, accounting and business advice to companies, directors, landlords, employers, individuals and family businesses.
Whether you need help with:
mileage rates and employee expenses;
VAT advice;
Self Assessment;
director tax planning;
R&D tax relief;
payroll and employment-related tax;
business cash flow;
late payment issues;
business growth and financial management;
our team is here to help.
If any of the topics in this June business update affect you, your business or your employees, please get in touch. We would be happy to help you understand the rules, plan ahead and make confident decisions.