On 21 May 2026, Chancellor Rachel Reeves announced the Great British Summer Savings scheme, a package of measures aimed at reducing costs for families across the UK. But buried within the headlines are two changes that matter just as much to business owners, directors, and the self-employed as they do to families planning a day out.
Here’s a plain-English breakdown of what’s changed, what it means for your business, and what you should do next.
HMRC Mileage Rates 2026/27: The Biggest Increase in 15 Years
If you or your employees use a personal vehicle for business travel, this is the most significant update in over a decade.
The HMRC approved mileage rate for cars and vans has increased from 45p to 55p per mile for the first 10,000 business miles in the 2026/27 tax year and it’s been backdated to 6 April 2026. That means if you’ve already been paying or claiming mileage since the start of the tax year, you may owe a top-up.
This is the first increase to HMRC’s Approved Mileage Allowance Payments (AMAPs) since 2011, a long-overdue update given how much the cost of running a vehicle has risen in that time.
Updated HMRC Mileage Rates for 2026/27
For employees using their own vehicle:
| Vehicle |
First 10,000 miles |
Over 10,000 miles |
| Cars & vans |
55p (up from 45p) |
25p (unchanged) |
| Motorbikes |
24p (unchanged) |
24p (unchanged) |
| Bicycles |
20p (unchanged) |
20p (unchanged) |
For the self-employed:
| Vehicle |
First 10,000 miles |
Over 10,000 miles |
| Cars & goods vehicles |
55p (up from 45p) |
25p (unchanged) |
| Motorbikes |
24p (unchanged) |
24p (unchanged) |
Only the rate for cars and vans (or goods vehicles) for the first 10,000 miles has changed. All other rates remain the same.
What Does This Mean in Practice?
The Treasury estimates this saves a worker doing around 6,000 business miles approximately £120 per year, but for higher mileage drivers, the saving is considerably more. For example, an employee driving 10,000 business miles in their own car could now receive up to £5,500 tax-free, compared to £4,500 under the old rate.
What Should Employers Do Now?
- Update your mileage reimbursement policy to reflect 55p per mile for cars and vans
- Review mileage payments made since 6 April 2026 – if you’ve been paying at the old 45p rate, consider making a top-up payment to employees
- Check employees aren’t being underpaid – if your rate is lower than the HMRC approved amount, staff may be missing out on tax relief and could have grounds to claim the difference themselves
- Don’t overpay either – reimbursing above the approved HMRC rate creates a taxable benefit and potential National Insurance implications
What About Self-Employed Individuals?
If you’re self-employed and use simplified mileage expenses, you can claim the new 55p rate for the full 2026/27 tax year on your Self Assessment return. Make sure your mileage logs are up to date – HMRC requires records of each journey’s date, start and end point, reason for travel, and total miles claimed.
Temporary 5% VAT Rate on Summer Activities: What It Means for Your Business
From 25 June to 1 September 2026, the standard 20% rate of VAT will be reduced to 5% on a specific range of activities. While this is primarily aimed at helping families during the school holidays, it has direct practical implications for businesses operating in the affected sectors.
What’s Covered?
Children’s meals in restaurants and cafés, where the meal:
- Is specifically held out for sale as a children’s meal
- Is a supply of catering consumed on the premises
- Is not takeaway food
- Can include drinks
Children’s tickets for cinema, theatre, shows, and concerts.
Admission to qualifying attractions – including amusement parks, museums, heritage sites, zoos, and soft play areas. Importantly, the reduced rate applies to all admissions regardless of age, not just children’s tickets.
What Do Affected Businesses Need to Do?
If your business falls into any of the above categories, there are a few things to get in order before 25 June:
- Update your point-of-sale and accounting systems to apply the 5% rate to eligible sales from the correct date
- Review your VAT return periods – if your VAT quarter straddles the start or end date, you’ll need to apply different rates within the same period
- Train your team on which products or admissions qualify and which don’t, especially if your business offers a mix of eligible and non-eligible items
- Revert to 20% from 1 September – this is a temporary measure, so your systems need to switch back automatically or be updated manually on that date
If you’re not sure whether your business qualifies, or how to handle the transitional periods, it’s worth speaking to an accountant before the change comes into effect.
A Quick Summary
| Change |
What’s Changed |
When From |
| HMRC mileage rate (cars/vans, first 10,000 miles) |
45p → 55p per mile |
Backdated to 6 April 2026 |
| VAT on eligible summer activities |
20% → 5% |
25 June – 1 September 2026 |
Not Sure How This Affects Your Business?
These changes might seem straightforward on paper, but the practical implications – especially around backdated mileage payments and VAT system updates — can be easy to get wrong.
At A&C Chartered Accountants, we work with startups and SMEs across Manchester and beyond to make sure they’re always on the right side of HMRC. Whether you need help updating your expense policy, reviewing your VAT setup, or just want a second opinion – we’re here to help.
Book a free consultation today →