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2026 May Tax News: What the Chancellor’s Latest Announcement Means for Businesses

Welcome to the May 2026 edition of Tax E-News. We hope that you find this informative. Please contact us if you wish to discuss any matters in more detail.

What the Chancellor’s Latest Announcement Means for Businesses

The Chancellor, Rachel Reeves, has unveiled new measures aimed at easing cost-of-living pressures across the UK. While positioned as support for households, several of the announcements will have a direct and immediate impact on employers, employees, and customer-facing businesses.

From a boost to mileage allowances to a temporary VAT reduction on children’s food and family activities, these changes are already generating significant attention across sectors.

Here is an overview of what you need to know. We hope that you find this informative. Please contact us if you wish to discuss any matters in more detail.

Mileage Increase: A Welcome Boost for Workers and Employers

One of the headline announcements is the increase in the Approved Mileage Allowance Payment (AMAP):

  • Rising from 45p to 55p per mile
  • Applicable to the first 10,000 business miles per year
  • Backdated to April 2026

What does this mean?

  • Employees using their own vehicles for work can now receive more tax-free reimbursement
  • Where employers pay less than 55p, individuals can claim tax relief on the difference
  • Employers may need to review and update expense policies quickly, particularly for teams reliant on travel (e.g. care, sales, field-based roles)

 VAT Reduction: Supporting Families and Driving Summer Spending

Alongside the mileage change, the government has introduced a temporary VAT cut from 20% to 5% on selected goods and services

This includes:

  • Children’s meals in restaurants and cafés
  • Family attractions, such as cinemas, theme parks, and zoos

What is the duration of this reduction:

  • The reduction is in place over the summer holiday period (late June to early September)

What does this mean?

  • Reduced costs for families dining out or enjoying leisure activities
  • A short-term boost to hospitality and tourism sectors
  • Businesses may need to adjust pricing, systems, and marketing quickly to reflect the change

For customer-facing businesses, this presents a clear opportunity to drive footfall and increase sales during a crucial trading season.

These measures form part of a broader government initiative focused on:

  • Supporting working households
  • Stimulating domestic spending
  • Providing relief during peak seasonal costs

Other elements of the new measures include:

  • A continued fuel duty freeze
  • Free bus travel for children in England during August
  • Adjustments to food tariffs and supply costs

What Should Businesses Be Thinking About?

For organisations across Greater Manchester and beyond, there are several key considerations:

  1. Review expense and mileage policies

Ensure reimbursement rates are aligned with the new 55p allowance to remain competitive and compliant.

  1. Update pricing and systems

Hospitality, leisure, and retail businesses should prepare for VAT adjustments and ensure systems reflect the correct rates.

  1. Utilise the summer opportunity

The VAT reduction creates a strong marketing moment—particularly for businesses targeting families.

  1. Communicate clearly

Employees and customers alike will benefit from understanding how these changes affect them—clear communication is key.

Final thoughts

While these measures are temporary in nature, they represent meaningful short-term support for both businesses and individuals.

The mileage increase addresses a long-standing gap in employee reimbursement, while the VAT reduction provides a timely boost to family spending and the visitor economy.

For businesses, the real opportunity lies in how quickly and effectively they respond -turning policy change into practical advantage.

The team at CNCA will continue to support businesses across the region in navigating change and maximising opportunity. If you would like tailored advice for your business situation, please contact us on [email protected] or 0161 495 4700. We would be happy to help you!

By |2026-05-26T13:40:38+01:00May 26th, 2026|News, Tax|

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