In this week’s Enews, we look at the government’s review of mileage rates for business users. There is also a reminder of the ‘contentious’ changes coming into force in the new tax year and information on tax-free Easter childcare to update you on. We look at changes to taxing benefits-in-kind through the payroll. There is also a reminder to register for new vaping duties and forecasts for higher energy bills to update you on. We look at a scam warning to pensioners who need to repay their Winter Fuel Payments. There is also a plea on skills planning for Gen Z and HMRC’s latest guidance for employers to update you on.
- UK government to review mileage rates
- New tax year brings contentious changes
- Save on Easter childcare with Tax-Free Childcare
- Countdown to taxation of benefits-in-kind via the payroll underway
- UK businesses should apply now for Vaping Products Duty
- Higher energy prices could leave typical British households £480 worse off this year
- Pensioners urged to be alert to Winter Fuel Payment scams
- Skills planning ‘vital’ to better engage Gen Z in workplace
- Latest guidance for employers
UK government to review mileage rates
The government has confirmed it will review approved mileage rates for business users ahead of a future Budget.
The announcement comes after more than a decade without change – despite rising fuel, insurance and maintenance costs leaving many workers covering the gap themselves.
Rachel Reeves, the Chancellor of the Exchequer, highlighted the issue earlier this month, recognising that approved mileage allowance payment rates have not changed since 2011 even as motoring costs have evolved significantly.
The government says the workers-first review will focus on people who rely on their car to do their job, ensuring ‘they are not left out of pocket’. As part of this, the government says it will meet with people struggling with increased costs to inform this review as it develops.
In the meantime, the government says wider action is being taken to support people with the cost of living and keep prices down at the pump, including by freezing fuel duty until September.
Dan Tomlinson, Exchequer Secretary to the Treasury, said:
‘Millions of working people rely on their car to do their job. But mileage rates have been unchanged since 2011 and that’s increased the cost of working. A review is well overdue.
‘Keeping prices down at the pump is an important way we can help people with the cost of living which is why fuel duty is already frozen.’
Internet link: GOV.UK
New tax year brings contentious changes
The start of the new tax year on 6 April 2026 will bring contentious changes with it, warns the Chartered Institute of Taxation (CIOT).
The most controversial change is the taxation of dividends and employee benefits as well as the introduction of Inheritance Tax (IHT) on family businesses and farms.
The government’s Making Tax Digital for Income Tax programme will require most sole traders and landlords with income of more than £50,000 a year to keep digital records and make quarterly submissions to HMRC.
Over the next three tax years HMRC plans to bring 2.9 million self-assessment taxpayers into the programme, requiring them to use compatible software to keep digital records and submit quarterly updates and an annual return.
Most of the changes take effect on Monday 6 April, the start of the new tax year, though a few changes will be in place from Wednesday 1 April.
Ellen Milner, CIOT Director of Public Policy, said:
‘Spring is a time of fresh starts, and for taxpayers it also marks the arrival of a new tax year and new tax rules.
‘The most contentious change being made this April is bringing business and agricultural assets into the scope of IHT, albeit with an additional allowance and being taxed at a lower rate. This will mean many more valuations of estates will be required. Farmers and business owners potentially in scope will need to pay careful attention to their tax planning.’
Internet link: CIOT website
Save on Easter childcare with Tax-Free Childcare
HMRC is urging families to sign up for Tax-Free Childcare before booking their Easter holiday childcare.
More than 542,000 families saved money on their childcare in December, the tax authority says.
Working families who sign up to Tax-Free Childcare can make yearly savings of £2,000 off their childcare costs for each of their children up to the age of 11 and £4,000 for disabled children up to the age of 16.
Once a Tax-Free Childcare account has been opened for each child, for every £8 deposited, the government tops it up by £2. A total of £46.6 million in government cash was added to accounts in December, the latest figures show, contributing to the cost of childcare for almost 660,000 children.
A family can save up to £500 every three months for each child (£1,000 every three months if the child is disabled) which can be used to pay for any approved childcare.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said:
‘£2,000 a year off childcare bills can make a big difference to household expenses. There are plenty of childcare providers to choose from to suit your needs and your children’s interests – sign up today to make those savings for the Easter school holidays and for your plans for the rest of the year. Go to GOV.UK to find out more.’
Internet link: HMRC press release
Countdown to taxation of benefits-in-kind via the payroll underway
There is now less than a year to go before all employers must tax benefits-in-kind via the payroll, the Chartered Institute of Taxation has warned.
Benefits-in-kind are non-cash benefits provided by employers to employees or directors. Common benefits include company cars, private medical insurance and gym membership.
While the benefit is paid for by the employer the recipient is required to pay Income Tax and potentially National Insurance contributions (NICs) on the value of the benefit, as if this value had been added to their salary.
Additionally, the employer must pay employer NICs on the value of the benefit. According to HMRC more than 3.5 million employees receive a taxable benefit-in-kind.
Currently, most employers compute the value of a taxable benefit after the end of the tax year and report it on a P11D form to HMRC and the employee. This means the employer potentially has up to 15 months to calculate, verify and report the value of a benefit.
From 6 April 2027 it will be a legal requirement to report and pay Income Tax and NICs on most benefits-in-kind and taxable expenses payments via payroll rather than waiting until the end of the tax year.
Sarah Hewson, Vice-Chair of the CIOT’s Employment Taxes Committee, said:
‘Mandatory payrolling of benefits will have a big impact on employers, employees and software providers. Don’t leave it too late to get ready for this change.’
Internet link: CIOT website
UK businesses should apply now for Vaping Products Duty
Vaping-related businesses and supply chains need to register now for Vaping Products Duty (VPD) and the Vaping Duty Stamps (VDS) Scheme, says HMRC.
Businesses need to provide the required information now to register for HMRC approval and begin the process of applying for duty stamps.
From 1 October 2026, this information will be used to determine when duty becomes payable, making registering now an essential step in early preparation.
Businesses can visit GOV.UK and search for ‘vaping duty’ to access guidance. It explains which vaping products are liable to the new excise duty, the key dates and milestones ahead, and the roles and responsibilities of manufacturers, importers, warehousekeepers and other businesses across the supply chain.
It also sets out how and when businesses need to register and apply for the relevant approvals, which will take at least 45 working days if further information is needed.
Rachel Nixon, HMRC’s Director of Indirect Tax, said:
‘From 1 April 2026, UK vape manufacturers, importers and warehousekeepers can apply to HMRC for VPD and VDS Scheme approval, which is essential for these businesses to continue trading legally from 1 October.
‘Our guidance brings all the key information together, and using it now will help firms prepare properly, avoid errors and ensure they can continue trading when the new requirements apply from October.’
Internet link: HMRC press release
Higher energy prices could leave typical British households £480 worse off this year
Higher energy prices due to the conflict in the Middle East are set to make the median working-age British household £480 worse off this year, according to the Resolution Foundation.
The think tank based its estimates on market-forecasts for the rise in energy prices consistent with market pricing after the announcement of a ceasefire.
For families with above average income, rising energy prices will likely tip living standards growth into negative territory, says the Foundation.
The typical household, previously on track for 0.9% growth, is now set to see its income fall by 0.6% – a difference of £480 – over the course of the current financial year.
It says that average income growth for the poorest fifth this year is now set to be just 1.2%, down from 2.8% before the conflict.
James Smith, Chief Economist at the Resolution Foundation, said:
‘Despite hopes for a sustained peace, the path of this conflict remains uncertain and energy prices remain well above pre-war levels, meaning many households face a decline in their purchasing power this year.
‘This squeeze will run right through the income distribution. Lower-income households will still see some income growth thanks to a long-awaited rise in real benefit levels, but inflation will likely knock more than a percentage point off what they stood to gain.
‘For those in the middle and towards the top of the income distribution, even the thin growth they had been expecting has tipped into negative territory.’
Internet link: Resolution Foundation website
Pensioners urged to be alert to Winter Fuel Payment scams
HMRC is warning pensioners to be on high alert for scams as the recovery of Winter Fuel Payments begins this month.
Almost two million people are expected to repay their winter 2025 payment due to their annual income being more than £35,000.
HMRC saw more than 25,000 Winter Fuel Payment scam referrals over the last 12 months. It is warning that scammers may now use the recovery process to target this group.
For most, the payment will be recovered through a change to their PAYE tax code from April 2026 with no need to contact HMRC.
For those in self assessment who file online, the payment should be pre-populated in their 2025/26 tax return. Customers should check and add it manually if it is not shown. Paper filers will need to add it on their tax return.
This applies across the UK – including in Scotland, where the payment is known as the Pension Age Winter Heating Payment and in Northern Ireland, where payments were made by the Department for Work and Pensions on behalf of the Northern Ireland Executive. In all cases, recovery is handled by HMRC.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said:
‘Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money.
‘I’d encourage anyone who’s unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered – there’s no need to call us.’
Internet link: HMRC press release
Skills planning ‘vital’ to better engage Gen Z in workplace
Skills planning is ‘vital’ to better engaging Generation Z with the workplace, says the British Chambers of Commerce (BCC).
The report analysed Local Skills Improvement Plans (LSIPs) and found that they have engaged thousands of people and employers in the training and education that firms require.
However, the business group also found that the ‘fragmented’ nature of funding and a limited scope to target young people has led to a range of opportunities being missed.
A number of prospects have been identified to unlock potential, the BCC said.
These include a lack of influence in education for under-16s, opportunities to replicate the system for business support and more effective engagement with young people.
Kate Shoesmith, Director of Policy at the BCC, said:
‘LSIPs have been really successful – involving thousands of businesses, training providers and learners over the past four years, to deliver great employment outcomes.
‘But with almost one million Gen Zs not in employment, education or training, earlier intervention is essential to connect young people to the world of work.
‘The longer they are allowed to drift away from employment the harder it becomes. By linking the government’s Youth Guarantee scheme to ERBs who have strategic oversight of their local economies, a pathway into work can be created.
‘The tools required to do this already exist through LSIPs. It is just a matter of giving them the long-term funding and authority to make it happen.’
Internet link: BCC website
Latest guidance for employers
HMRC has published the latest issue of the Employer Bulletin. The April issue has information on various topics, including:
- Reminder of key dates and processes for reporting benefits in kind (BiKs).
- Real Time Information submission problems — Incorrect handling of Payroll ID.
- Removal of the tax relief for non-reimbursed homeworking expenses.
- The official rate of interest from 6 April 2026.
- The ‘Tell ABAB’ survey 2026.
- Statutory Sick Pay changes — what employers need to know.
Internet link: GOV.UK
