Payroll changes confirmed, MTD deadline approaches and updated fuel rates.

Welcome to the July 2026 edition of Tax E-News.

This month, we’re looking at the phased introduction of mandatory payrolling of Benefits in Kind, the first Making Tax Digital for Income Tax quarterly submission deadline, a new AI-powered GOV.UK chatbot, HMRC’s latest position on VAT for public electric vehicle charging, and updated advisory fuel rates for company cars and business mileage.

As ever, understanding these changes early can help you stay compliant, reduce disruption and make informed decisions.

If you would like to discuss any of the topics covered, please get in touch.

Mandatory payrolling of Benefits in Kind: phased introduction confirmed

HMRC has confirmed that mandatory payrolling of Benefits in Kind (BiKs) will be introduced in two phases, starting from 6th April 2027.

The change will move the reporting of most Benefits in Kind away from annual P11Ds and into real-time payroll. This means Income Tax and Class 1A National Insurance will be reported through payroll each pay period, whether that’s weekly or monthly.

From April 2027, the first phase will apply to:

• Company cars and car fuel
• Vans and van fuel
• Employer-provided medical benefits

From April 2028, most other benefits will also be brought into the regime, although beneficial loans and employer-provided living accommodation will remain voluntary.

Under the new system, employers will report benefits through payroll each pay period using Real Time Information (RTI), rather than after the end of the tax year. While this should reduce the need for year-end forms, it also increases the importance of accurate payroll reporting throughout the year. Errors are likely to be identified more quickly, with corrections needing to be made in real time.

There is still time to prepare. HMRC is continuing to work with software providers and will release further technical guidance during 2026, with final details expected ahead of the Autumn Budget.

Employers should start planning now by reviewing the benefits they currently provide and identifying which will fall within the first phase.

If you would like help reviewing your employee benefits or preparing your payroll systems for these changes, please get in touch.
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MTD for Income Tax: first quarterly deadline approaching

The first Making Tax Digital quarterly submission deadline is fast approaching for many self-employed individuals and landlords.

Most self-employed individuals and landlords with turnover above £50,000 in 2024/25 entered the regime from 6th April 2026.

Under MTD for IT, digital records must be maintained and quarterly updates need to be submitted to HMRC using compatible software. This represents a significant change from the previous system, where reporting generally took place after the end of the tax year.

The first quarterly update for the 2026/27 tax year is due by 7th August 2026.

With the deadline approaching, it is important that records are complete and up to date well before submission.

Leaving your quarterly update until the last minute increases the risk of delays or errors. If MTD for Income Tax applies to you, now is the time to ensure your records are complete and ready for submission.

GOV.UK Chat: a new AI tool for tax queries

The Government has launched a new AI-powered chatbot designed to help users find official guidance more quickly.

GOV.UK Chat allows users to ask questions in plain English and receive instant answers based on published GOV.UK guidance.

The chatbot can answer a range of tax-related questions, including:

• Understanding Income Tax
• Calculating Stamp Duty
• Planning for retirement and the State Pension

Since its soft launch in March 2026, thousands of users have already used the service, with tax-related questions proving especially popular.

While the tool can be useful, it is important to understand its limitations.

GOV.UK Chat only uses published GOV.UK guidance. It does not access HMRC manuals or more detailed technical sources and is primarily designed for straightforward queries.

As with any AI tool, accuracy is not guaranteed. Responses can be incomplete or occasionally incorrect. GOV.UK Chat can be a useful starting point when looking for official guidance. However, it should not replace professional advice, particularly where your circumstances are more complex.

VAT and public electric vehicle charging points

HMRC has published Revenue and Customs Brief 4 (2026): VAT liability of supplies of electricity from public electric vehicle charge points, setting out its position following the First-tier Tribunal (FTT) decision in Charge My Street Ltd v HMRC.

The Tribunal found in favour of Charge My Street Ltd, concluding that electricity supplied at public electric vehicle charging points qualified for the reduced rate of VAT.

HMRC has applied for permission to appeal the decision and has confirmed that its view remains unchanged. It continues to treat electricity supplied at public charging points as subject to the standard rate of VAT.

Supplies of fuel and power to domestic premises continue to qualify for the reduced rate of VAT at 5%.

HMRC’s long-standing view is that public electric vehicle charging points do not qualify as domestic premises and, as a result, the standard rate of VAT applies to electricity supplied at these locations.

The Tribunal’s decision does not set a legal precedent. HMRC’s policy therefore remains unchanged, meaning there continues to be a difference between the VAT treatment of electricity used to charge vehicles at home and electricity supplied at public charging points.

Advisory fuel rates for company cars

HMRC has published the latest advisory fuel rates, which apply from 1st June 2026. These are the suggested reimbursement rates for employees using a company car for private mileage.

Where an employer does not pay for fuel for private use, these are the amounts that can be reimbursed for business journeys without creating a taxable benefit for the employee.

Previous rates are shown in brackets.

The previous rates can continue to be used for up to one month from the date the new rates apply.

For hybrid cars, the petrol or diesel rate should be used, depending on the engine type.

For fully electric vehicles, the advisory rate is 7p per mile where the vehicle is charged at home and 15p per mile where it is charged using public charging facilities.

For employees using their own cars for business, the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate increased on 6 April 2026 to 55p per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25p per mile thereafter. For National Insurance purposes, employers can continue to reimburse at the 55p rate regardless of mileage, as the 10,000-mile threshold does not apply.

Within the 55p and 25p AMAP rates, the fuel element is shown in the table above. Employers can reclaim 20/120 of the fuel element as input VAT, provided the claim is supported by a valid VAT invoice from the filling station. For example, for a 1500cc diesel car, 2.5p per mile can be reclaimed as input VAT (15p × 1/6).

Property tax newsletter

This month, we look at proposals to reform Stamp Duty Land Tax (SDLT), the government’s progress towards its target of delivering 1.5 million new homes, and how the conflict involving Iran has contributed to recent mortgage rate volatility.
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DIARY OF MAIN TAX EVENTS

JULY / AUGUST 2026

Content accurate as of 01.07.26