22/05/2026
Summer Tax Update – Key Changes for Businesses and Individuals
The government has announced a package of short-term measures and targeted tax changes as part of its “Great British Summer Savings” initiative. Below is a summary of the key points.
1. Temporary VAT cut to 5% (Summer 2026)
From 25 June to 1 September 2026, certain supplies will qualify for a reduced VAT rate of 5% (down from 20%).
This applies to:
* Children’s meals (dine-in only and clearly marketed as children’s meals)
* Children’s tickets (cinema, theatre, etc.)
* Admission to family attractions (e.g. theme parks, zoos)
**Action:** Hospitality and leisure businesses should review pricing, menus, and EPOS systems urgently to ensure correct VAT treatment.
2. Increase in tax‑free mileage rates (awaiting full rollout)
The Chancellor has announced a 10p increase in approved mileage rates**, taking the main rate to:
*55p per mile (first 10,000 miles)
*25p thereafter
This change is intended to be backdated to 6 April 2026.
Employers may want to review mileage reimbursement policies, but should wait for updated HMRC guidance before applying new rates in practice.
3. Oil & gas: foreign branch tax rules tightened
There will be a restriction on the use of the foreign branch (permanent establishment) exemption for oil and gas companies.
* Applies to overseas oil and gas activities
* Effective from **1 September 2026 (sector-specific)
*Wider reforms apply from 2027 accounting periods
**Impact:** Aimed at preventing profit shifting and may increase UK corporation tax exposure for affected groups.
4. Other announcements (non-core tax)
* Fuel duty freeze confirmed
* Temporary support measures for specific sectors (e.g. hauliers, agriculture)
* Free bus travel for children in August (England)
