Update Summer 2026

There were two surprise tax announcements from the Government in May 2026 regarding VAT and tax free mileage rates.

We’ll touch on each below plus changes to the self assessment tax return for Directors, Companies House filing requirements and some AI news.

Dividends on the 2025/26 self assessment tax return

HMRC are continuing their data grab for director/owner businesses with new information requirements on the 2025/2026 self assessment tax return.

There are new boxes on the 2025/26 employment page in the self assessment tax return. They require the following information for each directorship held by an individual:

• If the company was a close company (broadly where the number of owners is 5 or less);
• 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.

As night follows day, there’s a penalty involved, which is £60 and 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 even if you didn’t receive any income from them.

We are also expecting further information demands shortly from HMRC on the company tax return, asking for information about Director’s drawings from their companies. Therefore, it’s important that dividends are properly documented and disclosed on the individuals tax returns.

Tax-free mileage rate increases by 10p per mile – first increase since 2011!

The Government announced a 10p per mile increase in the tax-free mileage rate that applies to the first 10,000 business miles travelled in a car or van in a tax year.

The increase, which has been backdated to April 2026, means that the rates for the 2026-27 tax year are now as follows:

Kind of vehicle	Business miles	Pence per mile
Car or van	First 10,000	55p
Car or van	After 10,000	25p
Motorcycle	All	24p
Cycle	All	20p

Cars and vans include electric and hybrid cars and vans as well as those that run on petrol and diesel.

The rates mean that employers can reimburse their workers claims for business travel at these rates (or below) free of tax and national insurance.

These rates are also useful to self-employed individuals, as a deduction can be claimed based on their business mileage without needing to make any adjustment for private use. The business is just required to keep a mileage log of business journeys.

Note that a business can only use these rates if capital allowances have not been claimed on the vehicle, and the cost of the vehicle has not been claimed as a deduction under cash basis accounting.

Temporary reduced rate of vat

The government has announced a temporary reduced rate of VAT for children’s meals in restaurants and family leisure activities over the summer.

VAT will be reduced from 20% to 5% between 25 June and 1 September 2026 for qualifying activities.

The temporary VAT reduction applies in England, Wales, Scotland and Northern Ireland. In addition, children in England aged 5-15 will qualify for free bus travel during August.

It’s overly complicated so please get in touch if this affects you.

Companies House and the filing of small/micro company accounts

Last year we let you know about some changes happening with Companies House, and the worrying proposal to have to file a profit and loss account in the public domain. The issue of privacy was a great concern to us so we were pleased when the proposal appeared to be brushed under the carpet.

It’s now reared its ugly head again and will be enforced from April 2028, but with a twist. Whilst a profit and loss account must be filed at Companies House, you can elect to opt out of this being placed on the public register.

We can’t understand quite why Companies House want the profit and loss account if many will rightly not want it published. Especially when another branch of Government, namely HMRC, already has it.

We will keep you informed about how this will work. Please rest assured that our mantra of “as little as possible in the public domain” will continue to direct our advice to you.

And finally – agentic AI

We thought we’d end this update with an article about a new version of AI that is starting to appear. On the basis that this is a cautionary article about AI, we’re hoping it shows that it’s been written by a human and not Chat GPT (others are available).

This version of AI is one that can act independently without human prompting. The National Cyber Security Centre has issued guidance about this agentic form of AI and how disaster may be one step away if we’re not careful.

An example is that you could give this new version of AI the task of ‘sourcing a holiday for less than £500’, and it would then search for flights, compare prices, check your calendar and actually book the best option without further instruction. This might be useful in some scenarios but could get out of hand if unchecked. So please look at the blog on the NCSC’s website here.

AI can be useful but have these software developers not watched The Terminator films?

That’s all for now.

The Team at Cleverdons