June 2026 Newsletter

June brings the first full month of the new tax year into sharper focus. The changes that arrived in April – from Making Tax Digital to revised capital gains rates and dividend taxes – are no longer theoretical. Clients are now operating under the new rules, and June is the time to ensure everything is working as it should. It also brings its own set of deadlines, with P11D reporting on the horizon, a mid-month PAYE reckoning, and a VAT change that hospitality and leisure clients will want to act on before the 25th.

As ever, the businesses that stay ahead of these dates rather than reacting to them are the ones that avoid unnecessary penalties and stress. If anything in this month’s newsletter raises questions for your business, get in touch with the team at Mercian, and we will be happy to help.

Making Tax Digital for Income Tax – Your First Quarterly Deadline Is Approaching

If you have a gross income over £50,000 from self-employment or property, Making Tax Digital for Income Tax has been live since 6 April 2026. The new system replaces the annual Self Assessment return with quarterly digital updates, plus a year-end finalisation.

The first quarterly period runs from 6 April to 5 July 2026. The deadline for submitting that first update to HMRC is 7 August 2026 – which may feel comfortably distant, but June is the moment to make sure digital records are being kept correctly, and that compatible software is in place. Errors or gaps discovered in August are much harder to fix than those caught now.

From April 2027, the threshold drops to £30,000, and from April 2028 to £20,000. If you are not yet in scope but expect to be, now is a good time to start preparing your record-keeping habits.

Dividend Tax Rates Have Risen – Is Your Remuneration Structure Still Optimal?

From 6 April 2026, the tax rates on dividends increased across the board. The basic rate rose from 8.75% to 10.75%, and the higher rate from 33.75% to 35.75%. For director-shareholders who receive a combination of salary and dividends, this changes the calculation of the most tax-efficient split.

If you have not reviewed your remuneration structure since April, June is a sensible time to do so. The difference between an optimised and an unreviewed arrangement can add up to a meaningful sum over a full tax year. Please get in touch if you would like us to run the numbers for your specific situation.

Capital Gains Tax on Business Asset Disposals – What the April Rise Means

The rate of Capital Gains Tax applying to business asset disposals increased to 18% from 6 April 2026. For those who had been planning to sell or dispose of a business asset and had deferred the decision, hoping rates might fall, the picture has not improved.

If you are considering a business sale, a disposal of commercial property, or any significant asset transaction, timing and structuring decisions can still make a significant difference to the tax outcome. Early planning – ideally before heads of terms are agreed – is essential. This is not an area where last-minute decisions tend to go well.

Writing Down Allowance Reduced – Capital Investment Decisions Need Revisiting

The main rate of Writing Down Allowance for plant and machinery fell from 18% to 14% from April 2026. This affects how quickly businesses can claim tax relief on capital expenditure not covered by the Annual Investment Allowance.

Businesses planning significant investment in equipment, vehicles, or machinery should factor this into their projections. The Annual Investment Allowance of £1 million remains unchanged and continues to offer 100% relief in the year of purchase for most businesses, so timing and structuring of expenditure still matter. We can help model the most efficient approach.

VAT Cut on Children’s Meals and Leisure – Act Before 25 June

From 25 June to 1 September 2026, the VAT rate on children’s meals and certain activities and attractions will be reduced from 20% to 5%. This affects businesses in hospitality, leisure, and food service that charge for children’s offerings.

If this applies to your business, you will need to update your point-of-sale systems, invoicing, and VAT records before 25 June. The temporary nature of the reduction – running to 1 September – also means you will need to switch back, so building the reverse into your diary now avoids a scramble in late summer.

P11D Deadline – Start Your Benefits Reporting Now

The deadline for submitting P11D forms – reporting benefits in kind provided to employees and directors – is 6 July 2026. That is closer than it looks, and for employers with numerous or complex benefit arrangements, the data collection process can take longer than expected.

Benefits to account for include company cars and fuel, private medical insurance, beneficial loans, gym memberships, and any other non-cash benefits provided during 2025-26. The employer Class 1A National Insurance charge on those benefits is also due by 19 July 2026 (22 July if paying electronically).

If you payroll your benefits rather than report them via P11D, you will not need to submit forms for those benefits, but you should still check that everything was captured correctly throughout the year.

Business Rates – New Multipliers Now in Force

New business rates multipliers took effect on 1 April 2026, and many businesses will now receive revised bills reflecting the changes. The standard multiplier has decreased from 55.5p to 48p. The small business multiplier has fallen from 49.9p to 43.2p. For retail, hospitality, and leisure properties with a rateable value below £51,000, the new RHL small business multiplier is 38.2p.

A redesigned transitional relief scheme worth £3.2 billion is in place to cap large increases in bills for those facing higher costs. If you believe your rates bill does not reflect these changes or looks incorrect, contact your local billing authority. The Valuation Office Agency is responsible for rateable values and can be contacted if you believe your rateable value itself needs reviewing.

What Businesses Should Be Doing Now

Employers

• Gather P11D data now – do not leave it to early July
• Check your June PAYE/NIC/CIS payment is ready ahead of the 22nd
• If you have payrolled benefits, verify all were captured correctly throughout 2025-26

VAT-Registered Businesses

• Hospitality and leisure operators: check which services qualify and update systems ahead of the 25 June VAT change
• Check your next VAT return deadline and whether the June rate change affects your calculation

Director-Shareholders

• Review your salary and dividend split in light of the April dividend tax rate increase
• If you are considering selling or disposing of business assets, take advice before proceeding – Business Asset Disposal Relief rules may apply

Sole Traders and Landlords

• If your income exceeds £50,000, confirm you are signed up for Making Tax Digital and using compliant software
• Start gathering income and expense records for the first quarterly MTD update (period: 6 Apr – 5 Jul)

All Businesses

• Check your business rates bill reflects the new multipliers
• Diarise the 31 July payment on account deadline if it applies to you

Did You Know?

A lighter note – a few curiosities from the history of tax and accountancy.

The World’s Oldest Tax Was on Beer

The earliest recorded taxes date to ancient Egypt, around 3000 BCE. Egyptians were taxed on crops, cooking oil, and yes, beer. Tax inspectors would check households’ oil jars to ensure no one reused oil to dodge payment. The impulse to close tax loopholes is apparently as old as civilisation itself.

An Accountant Invented Bubblegum

Walter Diemer was an accountant at the Fleer Corporation in Philadelphia. In 1928, while experimenting with gum recipes in his spare time, he accidentally created a formulation stretchy enough to blow bubbles. He coloured it pink because that was the only food dye to hand, which is why bubble gum has been pink ever since.

Peter the Great Taxed Beards

In 1698, Russia’s Peter the Great introduced a beard tax to push the country toward Western fashions. Men who paid received a copper token as proof. Those caught without one were shaved on the spot by officials. A lesson, perhaps, in creative compliance enforcement.

Diary of Main Tax Events – June and July 2026

ATED Returns: Key Submission Deadlines

If you own UK residential property through a company and it falls within the scope of the Annual Tax on Enveloped Dwellings (ATED), it is important to be aware of the deadlines for submitting your return.

Normally, an ATED return must be submitted:

• By 30 April, if the property is within the scope of ATED on 1 April at the start of the chargeable period
• Within 30 days of acquisition, if the property comes within the scope of ATED after 1 April

For newly built properties, the deadline is extended – the return must be submitted within 90 days of the earliest date on which the property either becomes a dwelling for Council Tax purposes or is first occupied.

ATED returns should only be submitted on or after 1 April for the relevant chargeable period. Submitting too early can cause processing issues, while missing deadlines may result in penalties.

If you are unsure whether your property is within the scope of ATED or which deadline applies, get in touch, and we can help you assess your position.

Looking Ahead

July brings two significant deadlines in quick succession: the P11D Class 1A NIC payment on 22 July, and the self-assessment payment on account on 31 July. If your profits have fallen this year relative to last, it may be possible to reduce your payment on account – but this needs to be done in advance of the deadline, not after. Get in touch with us if you would like to discuss your position, and we will be happy to help.

This newsletter is for general guidance only and does not constitute professional advice. Please contact us to discuss your specific circumstances.

Related posts:

March 2025 Newsletter Are You Ready for Making Tax Digital (MTD)? April 2026 Newsletter May 2026 Newsletter