Updates from the Chancelor - May 2026

Following the recent announcements from Chancellor, We wanted to highlight a few key changes that may affect you and your business over the coming months.

Key Updates

Temporary VAT Reduction
A temporary VAT reduction from 20% to 5% has been announced for selected leisure, hospitality and family entertainment sectors over the summer period. Businesses operating in these areas should review pricing, invoicing and till systems to ensure they apply the correct rates where eligible.

Mileage Allowance Increase
The tax-free mileage allowance is also set to increase, which may provide additional relief for employees and directors using personal vehicles for business travel. It’s a good time to review mileage claims and reimbursement policies.

Other Points Worth Noting

• Fuel duty increases have been postponed

• Additional support measures have been announced for certain sectors facing rising costs

• HMRC compliance activity continues to increase, particularly around VAT and expense claims

• Businesses should ensure bookkeeping and digital records remain up to date ahead of further Making Tax Digital developments

As always, every business is different, and the impact will depend on your sector and trading structure. If you'd like to discuss how these changes affect you specifically, feel free to get in touch.