July 2026 Newsletter
Over 110,000 taxpayers yet to register for MTD
More than 110,000 unrepresented taxpayers who must register for Making Tax Digital (MTD) from April 2026 have still not done so, according to the Low Incomes Tax Reform Group (LITRG).
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LITRG's estimates are based on official HMRC statistics on the number of unrepresented taxpayers it estimates will be in scope for MTD from April 2026, alongside recent public comments from senior HMRC officials on registration and sign-up rates.
From April 2026, taxpayers with gross income of more than £50,000 from self-employment or rental income in the 2024/25 tax year are mandated to use MTD unless they are exempt.
From April 2027, the £50,000 threshold falls to £30,000 and then to £20,000 from April 2028.
LITRG believes that of the 216,000 unrepresented taxpayers HMRC expect to be in scope for this year, around 111,000 have still to register.
Sharron West, LITRG Technical Officer, said:
'While most of the taxpayers who need to use Making Tax Digital from April 2026 have the services of a professional tax adviser or accountant to help them, there are a significant number who don't, and many of them have still not signed up.
We are concerned that there are a substantial number of people who should register but don't realise they need to.
However, the good news is that there's still time for these taxpayers to get ready ahead of the first reporting update due on 7 August 2026.'
Source: Chartered Institute of Taxation Website
Expansion of 'uncertain tax treatment' rules cause for concern
Government plans to extend the rules requiring some taxpayers to declare 'uncertain' tax positions risk creating more uncertainty, compliance burdens and tax disputes according to the CIOT.
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The uncertain tax treatment regime currently requires large businesses to flag uncertain interpretations of tax law to HMRC upfront if significant amounts of money are at stake.
The government is proposing to turn it into a much wider transparency regime, reaching beyond large businesses into individuals and trusts, expanding to cover additional taxes and potentially introducing a new, much broader trigger for notification.
The CIOT is warning that the proposed third trigger - where there is more than one 'credible' interpretation and HMRC's view is not known - is too subjective to work effectively in practice.
Lauren Fletcher, CIOT Tax Technical Senior Manager, said:
'These proposals would expand the uncertain tax treatment rules to more taxpayers, more taxes and a broader set of uncertainties - a potentially significant compliance expansion. But they are unworkable in their current form and need further development before any legislation is brought forward.
'The government is right to want to reduce the 'legal interpretation' tax gap and give taxpayers more certainty. But these proposals risk doing the opposite regarding certainty. A notification regime should provide clarity, not create a fresh layer of uncertainty around whether a taxpayer is required to notify in the first place.'
Source: CIOT Website
Phased rollout of payrolling for employee benefits a 'welcome step'
The decision to phase in the mandatory payrolling of benefits in kind is a 'welcome step' to allow employers and payroll software providers more time to prepare for significant changes, says the Association of Taxation Technicians (ATT).
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Benefits in kind are non-cash perks such as company cars or private medical insurance. Currently, most employers report these once a year using a Form P11D, with tax collected through adjustments to employees' tax codes. This can lead to inaccuracies and the possibility of unwelcome tax bills after the end of the tax year.
Under payrolling, the value of these benefits is added to employees' pay in real time, so the correct tax is deducted through the payroll each month. Although this improves accuracy and transparency it also requires employers to gather detailed information. They must also ensure their payroll systems can handle the changes.
HMRC had planned to introduce mandatory payrolling for all benefits and more detailed information requirements from April 2027. However, it has now confirmed a phased approach will be taken.
Jon Stride, Chair of the ATT's Technical Steering Group, said:
'This is a sensible and welcome step by HMRC. Moving to real-time taxation of benefits should ultimately improve accuracy for employees, but the original timetable based on full implementation in one go was overly ambitious.
A phased approach gives employers, software providers and HMRC the time needed to get the systems right and avoid unnecessary disruption.'
Source: ATT Website
HMRC boosts funding for taxpayers needing extra support
More than £11 million in funding has been made available to taxpayers struggling with their tax affairs.
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The doubling of funding comes as part of HMRC's Voluntary and Community Sector Grant Funding Scheme. The funds will be available for organisations to help customers with their tax affairs.
From 8 June, organisations can submit bids for the funding, which is available for voluntary and community sector organisations to provide specialist advice and support to HMRC customers who may need extra help with their tax affairs, interacting with its digital services or claiming entitlements.
Dan Tomlinson, Exchequer Secretary to the Treasury, said:
'I'm delighted to build on our commitment to customers who need the most support and make this latest round of funding available for our partners in the voluntary sector who provide invaluable assistance to them.
This funding means customers, who may be struggling with their tax affairs, are able to get the help they need to make a real difference to their situation.'
Source: GOV.UK Website
Hospitality sector calls for 10% VAT rate
Hospitality businesses, teams and organisations are being urged to sign a new petition calling for the government to cut the VAT rate for the sector to 10% by UKHospitality.
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The trade group has launched #VATsTheProblem, a sector-wide campaign asking for the government to cut the rate of VAT for hospitality businesses, so it is in line with European levels.
UKHospitality is urging the entire sector to back its call by signing a new petition, with the aim to get a million signatures.
Hospitality groups, including the British Beer and Pub Association, the British Institute of Innkeeping and CODE Hospitality, are also supporting the campaign.
Celebrity chef and business owner Tom Kerridge said:
'Our sector is under huge pressure. We know it. We live and breathe it every day.
We know that the key to unleashing hospitality's potential to grow and thrive into the future comes through a VAT cut. We're making sure government knows that too.
This is a nationwide campaign with ambassadors big and small spreading the word to everyone that will listen, all asking for the same thing; a cut to hospitality's VAT to 10%.'
Small businesses to benefit from strengthened debt advice services
Small businesses and the self-employed struggling with their finances to receive a helping hand as debt advice services are strengthened, the Treasury has announced.
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The Treasury is making a £4 million funding boost over three years for business debt advice services support.
The funding will go towards expanding access to expert support to help businesses get back on track. The Treasury says this will benefit an additional 16,000 businesses over the next three years to total 75,000 businesses.
The Treasury says the funding builds on the success of the Business Debtline delivered by Money Advice Trust
There will be an additional £2 million funding this year to help modernise debt advice, it added.
Rachel Blake, Economic Secretary to the Treasury, said:
'From the plumber fixing your radiator to your local café, small businesses are the backbone of our economy, and we know they sometimes need a helping hand when times get tough.
We're building on the success of our expert debt services to help tens of thousands more get back on their feet.'
Source: GOV.UK Website
HMRC mileage rate increased to 55p
The headline approved mileage rate has increased to 55p per business mile for the first 10,000 miles, with effect from 6 April 2026. For each business mile over 10,000 miles, the approved mileage rate remains at 25p per business mile.
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This is part of a government package of measures intended to address rising fuel prices.
Approved mileage rates may provide relief from Income Tax where an employee or a self-employed individual makes business journeys in their own vehicle. Similar rules apply for the purposes of national insurance contributions (NIC).
Separate rates apply for motorcycles and bicycles, and there is also a rate for passenger payments.
No changes have been announced to these rates. However, the government has committed to a review of all rates and has indicated that this will be set out at a future Budget.
In a statement to parliament, Dan Tomlinson, the Exchequer Secretary to the Treasury, said:
'In March, the government announced a review of mileage rates for employees using their own vehicle for work and the self-employed who use the simplified expenses rates.
In recognition of the pressures facing drivers as a result of the effects of the Iran war, the government is today announcing the first uprating of mileage rates in 15 years, back dated to April, to provide immediate support to both groups.
Mileage rates will increase for 2026/27 from 45p to 55p for the first 10,000 miles, and 25p thereafter, with effect from 6 April 2026.
This will represent the largest ever increase to these mileage rates, benefitting around two million employees and one million self-employed individuals, saving over £120 a year for a worker doing 6,000 business miles.'
Source: Parliament Website
Latest guidance for employers
HMRC has published the latest issue of the Employer Bulletin.
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The June issue has information on various topics, including:
- PAYE Settlement Agreement (PSA) - agreements and a mailbox closure.
- Update - mandatory payrolling of benefits in kind to launch in phases.
- Reminder - file monthly Construction Industry Scheme (CIS) returns or face late-filing penalties.
- Low Earner's Pension Payment - what employers need to know.
- Employment Rights Act 2025 - actions to take now.
- Helping your workforce get ahead - encourage sending tax returns early.
Source: GOV.UK Website
