The Tax Round: Summer Edition 2026

In this Summer edition of Tax Round, we bring together the latest tax news, legislative updates and regulatory developments, providing a concise overview of the issues shaping the current tax landscape.

This edition explores a range of topical tax and business issues, including the impact of Making Tax Digital on self-employed individuals and landlords, the latest exemptions from MTD requirements, and the forthcoming Companies House accounts filing changes due to take effect in 2028. We also examine the recent Mega Marshmallows VAT case, the increase in approved mileage rates from April 2026, and the National Insurance changes affecting salary sacrifice arrangements from April 2029.

Alongside these developments, we consider the tax implications of employee benefits, the growing role of Family Investment Companies in inheritance tax planning, and other key updates that may affect individuals, employers and business owners. Together, these insights provide a practical overview of the latest tax and regulatory developments to help you plan ahead with confidence.

The Summer edition includes:

• What does Making Tax Digital mean for self-employed and landlords?
• Mega Marshmallows VAT case: Why some marshmallows qualify for zero-rated VAT
• Approved mileage rate increase from April 2026
• Salary sacrifice and National Insurance changes from April 2029
• Who is exempt from Making Tax Digital
• What are employee benefits and tax implications?
• Family investment companies and inheritance tax planning: key strategic considerations
• Companies House accounts filing changes 2028: what businesses need to know

We hope that you find the content insightful. If you would like any further clarification on the topics discussed in this newsletter, please contact  Mark Moore, or James Hadley.  We look forward to hearing from you.

Happy reading!

What self-employed individuals & landlords need to know

Making Tax Digital (MTD) is one of the most significant overhauls introduced by HMRC since the self-assessment was launched over 30 years ago.  It has been transformed to modernise the UK tax system by requiring digital record-keeping and reporting of your income and expenses, and regular online submissions to reduce reporting errors and close the tax gap using HMRC compatible software and ensure automatic data flows directly to your main tax return software from HMRC systems directly. 

MTD for Income Tax will apply from April 2026 to self-employed individuals and landlords earning over £50,000, with a further rollout to those earning above £30,000 in later phases.

Mega Marshmallows VAT Case: Why some marshmallows qualify for zero-rated VAT

The long-running VAT dispute between Innovative Bites Ltd and HM Revenue and Customs has taken another significant turn. In 2025, the Court of Appeal referred the case back to the First-tier Tribunal (FTT) to determine one key issue: are “Mega Marshmallows” normally eaten with the fingers?

The answer mattered because UK VAT legislation treats confectionery differently from most food products. While food is generally zero-rated for VAT, confectionery attracts VAT at the standard rate of 20%.

Approved mileage rates increase from April 2026

The government has announced the first increase to approved mileage rates for cars and vans in 15 years.

From 6 April 2026, the approved mileage allowance payment (AMAP) rate for the first 10,000 business miles will increase from 45p to 55p per mile. The rate for business mileage above 10,000 miles remains unchanged.

The government announced the increase on 21 May 2026 and will legislate retrospectively so the higher rate applies from the start of the 2026/27 tax year. The government says the change recognises the pressures facing drivers arising from the effects of the conflict in Iran and the resulting recent impact on fuel and transport costs.

Salary sacrifice and National Insurance changes from April 2029

The proposed changes to salary sacrifice arrangements were first announced during the Autumn Budget 2025, when the Government outlined plans to restrict the National Insurance advantages linked to certain salary sacrifice arrangements from April 2029.

At the time, many employers viewed the announcement as an early policy proposal that would still require consultation and parliamentary approval. That position has now changed.

On 29 April 2026, the National Insurance Contributions (Employer Pensions Contributions) Act 2026 received Royal Assent and officially became law. The legislation introduces a significant change to how National Insurance Contributions (NICs) savings will apply to salary sacrifice arrangements linked to pension contributions from 6 April 2029.

Who is exempt from Making Tax Digital

Making Tax Digital for Income Tax is a UK government initiative that requires taxpayers to maintain digital records and submit tax information electronically.

HMRC is rolling out the initiative in three phases: mandatory from April 2026 for self-employed individuals and landlords with income above £50,000; from April 2027 for those above £30,000; and from April 2028 for those above £20,000.

Most affected taxpayers will need to comply, but HMRC does grant exemptions in specific circumstances. MTD exemptions are not automatic: they require a formal application to HMRC with supporting evidence, and a rejected application means you must comply from your relevant mandation date. Read on to find out who qualifies for an exemption, what evidence you need to provide, and how Rayner Essex can support your application.  

What are employee benefits and tax implications?

Understanding employee benefits can be complex, particularly when it comes to knowing which perks are subject to taxation. Below, we take a look into the common benefits you can expect from a place of work, such as company cars, health insurance, and more, alongside their tax implications. This is essential in making better choices for your business or new job and confidently adhering to tax regulations.

What are employee benefits? 

In the UK, employee benefits are the extra perks employers offer beyond just salary and bonus. These range from pension plans and health insurance to paid time off and flexible working arrangements. All reflecting an employer’s dedication to supporting their workforce beyond financial remuneration. By providing these benefits, employers demonstrate their recognition of employees as valued contributors and partners in the company’s success, cultivating a culture of appreciation, loyalty and mutual respect. In addition to this, these perks contribute to a positive work environment, where employees feel valued, motivated, and empowered to perform at their best.

Family investment companies and inheritance tax planning: key considerations

Against a backdrop of frozen inheritance tax thresholds, rising asset values and increasing succession planning pressures, family investment companies have emerged as an increasingly popular wealth management structure for UK families, entrepreneurs and business owners seeking to preserve and transfer wealth across generations through effective inheritance tax planning and succession planning.

A family investment company (FIC) is typically established as a private company under the Companies Act 2006 and is often used as an alternative or complement to traditional trust planning. In the right circumstances, family investment companies can provide long-term flexibility, governance control and tax planning opportunities while helping families retain oversight of how wealth passes between generations.

Companies House accounts filing changes 2028: what businesses need to know

Companies House has confirmed that significant changes to UK accounts filing requirements will take effect from 1 April 2028. The reforms represent one of the biggest changes to company reporting in recent years and will affect how businesses prepare and submit their annual accounts.

The changes form part of the wider Economic Crime and Corporate Transparency Act reforms and aim to improve the accuracy, quality and transparency of information held on the Companies House register. Although the Government has delayed the implementation date by one year, businesses now have a clear timetable and approximately 21 months to prepare.

Key Dates 2025/2026