What the Latest HMRC Updates Mean for Your Business: Mileage Rate Increase & VAT Cuts for Children’s Activities
As part of the government’s ongoing efforts to support households and small businesses, HMRC updates announced yesterday make some changes to mileage rates and a reduction in VAT charged on children’s activities over the summer.
- HMRC Increases Mileage Rates
They have officially increased the Approved Mileage Allowance Payments (AMAP) for the 2026/27 tax year, and the change is backdated to 6 April 2026. The Approved Mileage Allowance Payments (AMAP) are the rates you can pay employees (or claim yourself, if you’re self‑employed) for business travel in a personal vehicle without creating a tax liability. This will be for travel as part of your employment not for commuting to and from that employment.
What’s changing
HMRC has increased the mileage rate for cars and vans for the first 10,000 business miles. The new rate is:
- Cars & vans: 55p per mile (up from 45p)
For Motorcycles and bicycles the rates remain unchanged. The higher rate reflects rising fuel, insurance and maintenance costs, and is designed to ensure employees and business owners aren’t left out of pocket when using their own vehicles for work.
What this means for you
- Employers can now reimburse staff at the higher rate without triggering tax or National Insurance.
- Self‑employed individuals can claim the increased rate as an allowable business expense, reducing taxable profit.
- Businesses with frequent travel may see a small increase in expense claims, so it’s worth reviewing budgets.
If you use mileage logs or apps, make sure they’re updated to reflect the new rates.
- VAT Reduction for Children’s Activities
HMRC update also introduced a VAT cut aimed at making children’s activities more affordable for families from 25 June to 1 September 2026.
What’s changing
A reduced VAT rate of 5% from 20% now applies to a specific range of children’s activities, which are:
- Children’s menu meals served in restaurants for consumption on the premises
- Children’s and family tickets for cinemas, theatres, concerts, shows and exhibitions
- Admission tickets, for both children and adults, to a range of attractions, including: amusement parks, fairs, museums, zoos, soft play centres, circuses, adventure parks, nature reserves, wildlife parks and observation attractions.
This money saving package supports families, while also supporting businesses through increased footfall. The government expects businesses to pass on VAT savings to customers.
Guidance for businesses in scope of the policy has been published by HMRC which outlines how businesses can operate the scheme.
What this means for your business
If you run a business providing children’s activities:
- Your VAT rate may drop from 20% to 5%, reducing the amount you need to charge customers.
- You’ll need to update your invoicing, accounting software and pricing to reflect the new rate.
- If you were previously just under the VAT threshold, the reduced rate may affect your long‑term VAT planning.
If you’re unsure whether your activity qualifies, we can help you review HMRC’s criteria.
How We Can Help
Both of these changes present opportunities — but also require careful implementation to stay compliant.
Our team can support you with:
- Updating payroll and expense systems
- Reviewing VAT treatment for your services
- Advising on pricing strategy following the VAT reduction
- Ensuring your bookkeeping and software reflect the new rules
- Helping you maximise allowable expenses and tax reliefs
If you’d like tailored advice on how these updates affect your business, we’re here to help.
You can also receive more guidance from HMRC themselves copying and using this link
Great British Summer Savings: VAT slashed to save families money on days out – GOV.UK
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