21/05/2026
Important Update for Small Business Owners
The Chancellor Rachel Reeves made several announcements today that could directly affect your business, and we wanted to make sure you had the key facts straight away.
Mileage Allowance Increase
The approved tax-free mileage rate has increased from 45p to 55p per mile, backdated to 6 April 2026. If you reimburse employees for business travel, you can now pay the higher rate tax-free, and you may be able to make a backdated top-up payment to employees who have already been reimbursed at the old rate this tax year.
Temporary VAT Reduction this Summer
From the end of June until 1 September 2026, VAT on a range of leisure and hospitality activities drops from 20% to 5%. If your business operates in any of the following areas, this affects you:
π‘ Theme parks, zoos, museums, soft play centres, adventure parks, nature reserves, wildlife parks and circuses
π¬ Cinemas, theatres, concerts, shows and exhibitions (children's and family tickets)
π½οΈ Children's meals served in restaurants and cafes
The reduction is temporary and it is up to businesses whether they pass the saving on to customers, but there are important VAT accounting implications to consider, and HMRC guidance has not yet been published.
We are reviewing the detail as it emerges and will be contacting clients we believe are affected directly. In the meantime, if you are unsure how any of these changes impact your business, our team is here to help.
π© Get in touch with us at Root2Growth and let's make sure you are making the most of every opportunity these changes bring.