HMRC announces tax simplification changes for employers and businesses

CREATED BY ROGER EDDOWES

Published: 09/07/2026 @ 09:00AM

#HMRC #taxsimplification #administrativeburdens #taxobligations #employertips

I read with interest an announcement by HMRC about a series of measures designed to simplify the tax system, reduce administrative burdens and make it easier for businesses to meet their tax obligations. While many of the proposals will be introduced over time, I think there are several updates that employers should be aware of now ...

Tax simplification changes for employers and businesses have been announced by HMRC

One of the key announcements is a review of HMRC's Benchmark Scale Rates (BSR) and Overseas Scale Rates (OSR). These rates allow employers to reimburse employees for business travel and subsistence without needing detailed receipts in every case.

HMRC will review whether current rates better reflect travel
costs and whether the two systems can be simplified!

The government has also launched a consultation on requiring VAT and PAYE liabilities to be paid by Direct Debit. This may sound a little authoritarian, but the proposal aims to reduce late payments, minimise errors and make paying a more straightforward process.

Don't panic right now, as it is only a consultation, so no immediate action is required, but you may wish to keep an eye on further developments.

I've blogged about this before, but there is also some welcome news for employers who reimburse staff for business mileage. The Approved Mileage Allowance Payment (AMAP) rate increased to 55p per mile for the first 10,000 business miles travelled in the tax year, while the rate remains at 25p per mile thereafter. The National Insurance disregard for Relevant Motoring Expenses has also increased to 55p per mile, with the changes backdated to 6 April 2026.

Employers who already processed payroll using previous rates
may need to review their April and May payroll!

Where tax and National Insurance were deducted because reimbursements exceeded the old rates, you may need to correct your payroll. If you currently reimburse at rates below the newly approved mileage rates, you should think about updating your policies soon.

The good news is that employees who receive less than the approved rate may be able to claim tax relief on the difference through HMRC.

In addition, the Government has confirmed temporary support measures for businesses affected by recent economic pressures, including a reduction in the duty charged on red diesel until the end of December 2026 and a temporary £1 Vehicle Excise Duty charge for qualifying HGV renewals over the next 12 months.

Although several of these changes are still being developed, I think they demonstrate HMRC's intention to modernise the tax system and reduce unnecessary complexity. Review these updates carefully and seek professional advice where necessary.

That willensure you remain compliant while taking advantage of any available reliefs.

Until next time ...

ROGER EDDOWES
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#HMRC #taxsimplification #administrativeburdens #taxobligations #employertips

About Roger Eddowes ...

Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

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HMRC announces tax simplification changes for employers and businesses

HMRC will review whether current rates better reflect travelcosts and whether the two systems can be simplified!

Don't panic right now, as it is only a consultation, so no immediate action is required, but you may wish to keep an eye on further developments.

Employers who already processed payroll using previous rates may need to review their April and May payroll!

The good news is that employees who receive less than the approved rate may be able to claim tax relief on the difference through HMRC.

HMRC will review whether current rates better reflect travel
costs and whether the two systems can be simplified!

Employers who already processed payroll using previous rates
may need to review their April and May payroll!