30 Jun HMRC Tax Update 2026: AMAPs, Direct Debit Proposals, and What Small Businesses Need to Know
If you have been keeping an eye on your inbox today, you might have spotted a rather significant update from HMRC. On 24 June 2026, the Exchequer Secretary, Dan Tomlinson, announced a fresh package of measures designed to "modernise" the tax system and provide some targeted relief to specific sectors.
As your friendly small business accountant, we know that "HMRC update" can sometimes be a phrase that causes a bit of a headache. However, this particular update contains some genuine wins for business owners: especially those who spend a lot of time on the road.
From a long-awaited increase in mileage rates to some major changes in how you might pay your VAT returns in the future, there is plenty to dig into. Let’s break down exactly what was announced and what it means for your business.
The Big Headline: Mileage Rates Jump to 55p
Are you still claiming 45p per mile for your business travel? Not for much longer.
For over a decade, the Approved Mileage Allowance Payments (AMAPs) have been stuck at 45p per mile. In the 2026 update, the government finally acknowledged that the cost of running a vehicle has moved on.
As of 6 April 2026, the rate for the first 10,000 business miles in a tax year has increased to 55p per mile. The rate for any miles driven over that 10,000-mile threshold remains at 25p.
What does this mean for your payroll?
Because this change is backdated to the start of the current tax year (April 2026), there is a bit of admin to catch up on. If you or your employees have been reimbursed at the old 45p rate during April and May, you will need to look at correcting this.
As a dedicated payroll bureau, we are already helping our clients navigate these adjustments. Here is the lowdown:
- Correction Required: If you paid employees at the old rates during the first two months of the tax year, your payroll records for those months will likely need an update to reflect the new 55p threshold.
- NICs Disregard: The National Insurance Contributions (NICs) disregard for Relevant Motoring Expenses (RME) has also been increased to 55p. This aligns the tax and NI treatment, making things a little simpler (once the initial corrections are done!).
- Employee Claims: If you, as an employer, choose not to reimburse at the full new 55p rate, your employees are entitled to claim the difference as tax relief directly from HMRC.
This is a significant boost for those in the media and entertainment industry or consulting businesses who travel frequently between sets, studios, or client sites.
Relief for Heavy Lifters: Red Diesel and HGV VED
Good news if your business relies on heavy machinery or haulage.
The June 2026 update didn’t just focus on the average car driver. There are specific, time-limited reliefs for sectors that have been feeling the pinch of rising fuel and operating costs.
Red Diesel Duty Cut
From 15 June 2026 until 31 December 2026, the duty on red diesel is being slashed from 10.18p per litre to just 6.48p per litre.
While red diesel is restricted to specific "off-road" uses: think agriculture, construction, and certain rail applications: this cut represents a meaningful saving for businesses in those sectors during the busy summer and autumn months.
HGV VED at Just £1
In an even more surprising move, the government has announced a temporary "renewal holiday" for Heavy Goods Vehicle (HGV) Vehicle Excise Duty (VED). For the next 12 months, hauliers will only have to pay £1 when they renew their VED.
If you run a fleet or work within the logistics side of the media industry, this is a welcome bit of breathing room. It’s designed to support the haulage industry while they continue to navigate the transition to greener fleets.
The Future of Payments: Mandatory Direct Debits?
HMRC is looking to change the way you pay your VAT and PAYE liabilities.
Perhaps the most significant "administrative" change in this update is the launch of a consultation regarding mandatory Direct Debits.
Currently, most businesses choose how they pay their VAT returns and PAYE: whether that’s by bank transfer, debit card, or Direct Debit. HMRC’s new proposal suggests making Direct Debit the mandatory payment method for these taxes.
Why the shift?
The government’s reasoning is twofold:
- Reducing Late Payments: Direct Debits are automated, meaning there is less risk of a busy director forgetting to hit "send" on a payment.
- Simplification: It streamlines the collection process for HMRC, theoretically reducing the need for chasing letters and penalties.
The consultation is open until 16 August 2026, and they are looking for views on how this would affect small businesses. While the idea of HMRC having a "direct line" to your bank account can feel a bit daunting, it can actually be a great tool for avoiding those pesky late payment surcharges.
If you’re worried about how this might impact your cash flow management, our bookkeeping services can help you keep a clearer eye on exactly what is due and when, so a Direct Debit never comes as a surprise.
Reviewing Travel Expenses: OSR and BSR
Are your travel expense rates still fit for purpose? HMRC is checking.
In addition to the mileage rate jump, the government is conducting a full review of Overseas Scale Rates (OSR) and Benchmark Scale Rates (BSR).
These are the fixed rates that employers can pay to employees for travel and subsistence (like meals and hotels) without needing to provide every single individual receipt to HMRC. They are particularly important for our clients who work internationally or have staff traveling across the UK.
The goal of the review is to ensure these rates reflect the actual, modern cost of travel in 2026. We expect to see updated figures later this year, which will hopefully make reimbursing staff for "lunch on the go" or "a night in a hotel" much more realistic.
What should you do now?
Take time to review your processes and don't be afraid to ask for help.
With so many dates and figures flying around, it’s easy to feel a bit overwhelmed. Here is a quick checklist of what you should do this week:
- Check Your Mileage: If you’ve been paying 45p, get ready to switch to 55p. Talk to your payroll bureau about those backdated adjustments for April and May.
- Fuel Up (if applicable): If your business uses red diesel, make sure you are benefiting from the new 6.48p rate as of 15 June.
- Renew with Confidence: If you have an HGV renewal coming up, enjoy that £1 VED rate!
- Think About Your Payments: Could you move to Direct Debit for VAT and PAYE now? It might be worth beating the mandatory rush and getting your systems set up early.
How Harrison’s Accountancy Can Help
At Harrison’s Accountancy, we act as your firm’s own CFO. We don’t just "do the books": we help you interpret updates like this so you can make the best decisions for your business growth.
Whether you need help fixing those backdated mileage payments, navigating the new VAT consultation, or just want to make sure your annual accounts are in tip-top shape, we are here to help.
You can read the full detail of the announcement on the official GOV.UK update here.
Have questions about how these changes affect your specific situation? Give us a shout! We love helping our clients focus on what they do best while we handle the "boring" (but very important) tax bits.
No Comments