May 2026 Newsletter

As we move deeper into the 2026/27 tax year, May is often the month when April’s changes stop feeling theoretical and start becoming practical. The rush of year-end processing may have eased, but employers are now focused on issuing P60s, checking that payroll has rolled over correctly and getting ahead of benefits reporting before summer deadlines begin to pile up. At the same time, landlords, directors and small business owners are dealing with a growing number of compliance changes that now need action, not just awareness.

This month also brings its usual timing issues. In England and Wales, the Early May bank holiday falls on 4 May and the Spring bank holiday on 25 May, which can affect payroll runs, staffing cover, payment timings and turnaround times across the month. For many businesses, that makes May a good time to review systems and deadlines before the pace picks up again in June and July.

In this edition, we look at the main issues worth keeping an eye on during May, including payroll year-end tasks, benefits reporting, landlord changes, Companies House identity verification and some quieter reforms that could still have a noticeable impact on businesses over the coming months.

P60s Should Be Going Out Now

For employers, the clearest May deadline is the requirement to provide a P60 to every employee who was on the payroll on 5 April. The deadline is 31 May, and while issuing P60s is a routine compliance task, it is one that often deserves more attention than it gets. For many employers, this is the point where payroll errors first become visible. Staff begin checking their figures for mortgage applications, benefit claims or tax return purposes, and issues that have gone unnoticed in earlier pay periods can suddenly become urgent.

May is also often the first proper opportunity to check whether payroll has settled correctly into the new tax year. If tax codes, thresholds, employee details or carry-forward data were handled incorrectly in April, it is far better to identify that now than let the issue continue for several more pay runs.

P11D Season Is Closer Than It Looks

Although the filing deadline for reporting expenses and benefits is not until 6 July, May is when sensible employers begin gathering the information. HMRC still requires P11D and P11D(b) forms for 2025/26 to be filed by 6 July, and late filing can trigger penalties, so this is one area where the formal deadline should not be left until the last minute.

More broadly, benefits reporting is becoming a more complex area for employers than it used to be. Businesses are already having to think ahead to the future of payrolling benefits, and even though the full shift is still ahead, the direction of travel is clear. Employers that leave benefits reporting until late June may find they are not simply preparing a return, but uncovering weaknesses in how benefits are tracked and valued in the first place.

New Relief on Reimbursed Employee Costs Is Worth Noticing

One of the more useful changes now in force is the widening of tax and National Insurance exemptions for certain reimbursed employee costs from 6 April 2026. HMRC confirmed in its April Employer Bulletin that qualifying reimbursements can now be made tax-free for items including eye tests, certain glasses for display screen users, seasonal flu vaccinations and some equipment needed for homeworking.

For many employers, this could be a genuinely practical reform. It narrows the difference between reimbursing an employee and providing something directly, which is especially relevant for businesses operating with hybrid or flexible working arrangements. May is therefore a good time to review expense policies and staff guidance rather than continue with outdated assumptions.

Construction Businesses Need to Watch CIS Again

Construction businesses have another important compliance point to keep in view. HMRC has confirmed that from April 2026 contractors are once again legally required to file a Construction Industry Scheme return every month, including nil returns where no subcontractors were used that month, unless an inactivity request is submitted in advance. The late-filing penalty regime has also returned.

This may not sound dramatic, but it matters because it reintroduces a level of monthly discipline that some contractors may have become less used to. Where a business assumes that no payment means no filing obligation, penalties can begin to build surprisingly quickly. For construction firms, May is a useful point to make sure CIS processes have not slipped into bad habits.

Landlords Face a Busy Month

Landlords have several important changes to keep in mind this month. From 1 May 2026, landlords in England need to follow the new Renters’ Rights Act rules. For pre-1 May 2026 assured or assured shorthold tenancies with wholly or partly written terms, the official government Information Sheet must be given by 31 May 2026. Where a pre-1 May 2026 tenancy is entirely verbal, landlords must instead provide the required written information about key tenancy terms by 31 May 2026.

The reforms are already causing concern across the sector, with reports pointing to low landlord confidence and a growing number looking to sell or reduce portfolios. For many landlords, the issue is not just compliance, but whether the economics and administration of holding property are becoming harder to justify.

That matters even more because the furnished holiday lettings regime has already disappeared, bringing with it the loss of favourable tax treatment that many owners had relied on. For property clients, May is not just about tenancy law. It is also a sensible time to review whether ownership structures, profit expectations and record-keeping still stack up under the new rules.

Companies House Identity Verification Is Now a Legal Requirement

Companies House identity verification is now a legal requirement for directors, PSCs and LLP members. The requirement began on 18 November 2025, with a 12-month transition period for existing office holders, so businesses should check their due dates and complete verification in good time.

Recent coverage suggests the new ID rules are already affecting company registrations and increasing the administrative burden for businesses and professional advisers alike. For owner-managed businesses in particular, this is the sort of requirement that can be easy to put off, but leaving it too late could make future filing and compliance matters more difficult. To find out more, read our Companies House Identity Verification page here.

May Is a Good Time to Review PAYE Settlement Agreements

Another issue worth putting on the radar now is whether a PAYE Settlement Agreement may be needed. The application deadline is 5 July following the relevant tax year, so May and June are the practical window for deciding whether minor, irregular or impracticable benefits would be better dealt with through a PSA rather than individual reporting.

For businesses that have provided staff entertaining, one-off gifts or occasional staff benefits, this can be an especially useful review point. The risk is not usually that the business has done something unusual, but that it has not yet decided how those items should be reported. Leaving that judgement until the last minute rarely makes life easier.

Bank Holidays Can Have a Bigger Impact Than Expected

May’s two bank holidays can look routine on paper, but in practice they often affect payroll processing, supplier payments, staffing cover and client turnaround times. The dates themselves are straightforward, but the real issue is the disruption that comes from shortened weeks at both the start and the end of the month.

For smaller businesses in particular, this can affect cash flow and scheduling in ways that seem minor in advance but frustrating in hindsight. It is one of those ordinary seasonal issues that rarely makes headlines but often causes avoidable disruption if ignored.

What Businesses Should Be Doing Now

• Employers should use May to finalise P60s, sense-check payroll accuracy, begin gathering P11D information and decide whether any staff costs or benefits need to be handled differently this year. The recent HMRC changes on reimbursed expenses may also make some existing policies worth revisiting.
• VAT-registered businesses on the quarter ended 31 March 2026 should note that the filing and payment deadline falls on 7 May. This will not apply to every business, but for those on the standard quarterly cycle it is an important date and one that can be easy to overlook in a month affected by two bank holidays.
• Landlords may need to take a broader look at their position this month. The new tenancy rules beginning on 1 May are significant in themselves, and they come at a time when the tax treatment of furnished holiday lettings has already changed. For some property owners, that combination may call for a wider review rather than just a quick compliance check.
• Company directors should not treat Companies House identity verification as something to deal with later in the year. The wider reform programme is already underway, and businesses that prepare early are likely to find the transition much smoother than those that leave it until filing becomes more time-sensitive.

Diary of Main Tax Events

May / June 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 ATED 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. In these cases, the ATED 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, we can help you assess your position and ensure returns are submitted correctly and on time.

Looking Ahead

May may not have the same obvious sense of change as April, but it is often the month when businesses discover whether their systems and processes are actually working. Payroll year-end tasks, benefits reporting, landlord compliance, Companies House reform and sector-specific obligations such as CIS now need practical follow-through rather than just awareness.

At Mercian Accountants, we are here to help clients make sense of these changes in practical terms and put the right processes in place before deadlines become problems. If you would like help with payroll, benefits reporting, landlord tax issues, company compliance or wider planning for 2026/27, please contact our team.

N.B. This document is for information only and does not constitute tax advice.

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