SME Tax News July 2026: New Government, MMTAR Deadline & VAT Electricity Cut Explained

July 2026 has arrived with a whirlwind of change for the UK business landscape. From a shift in leadership at No. 10 to significant updates in how we handle VAT and tax adviser registrations, small and medium-sized enterprises (SMEs) have a lot to digest.

At Accountant Search, we know that keeping up with tax news is often the last thing on a busy business owner's mind. However, these changes: particularly the upcoming MMTAR deadline and the simplification of the Capital Goods Scheme: could have a direct impact on your cash flow and compliance.

In this update, we break down the most important stories from the last week of July, helping you navigate the new government’s policies and the critical deadlines fast approaching.

A New Era: PM Andy Burnham and the VAT Electricity Cut

The political landscape has shifted significantly. Andy Burnham has taken office as Prime Minister, with John Healey stepping into the role of Chancellor, replacing Rachel Reeves. One of their first major fiscal announcements is a targeted measure to help both households and businesses with the cost of energy.

Starting from 1 October 2026, VAT on domestic electricity will be cut from 5% to 0% for a period of six months. This move is being funded by the cancellation of the previous administration's Digital ID programme. While this is primarily aimed at domestic households: saving the average home about £45 over the winter: it is also excellent news for many small businesses.

How does this affect your SME?

If your business operates from a home office or is eligible for the reduced VAT rate on energy (often the case for very small businesses or those with low energy usage), you will see these savings reflected in your bills. While six months is a temporary window, any reduction in overheads is a welcome boost for SME growth. It’s a good time to check with your business accountant uk to see if your energy contracts are set up to take full advantage of these changes.

MMTAR Deadline: 18 August 2026

One of the most critical administrative changes this year is the Modernising and Mandating Tax Adviser Registration (MMTAR). The first major deadline is fast approaching on 18 August 2026.

HMRC is tightening the rules on who can represent taxpayers. All tax adviser businesses that interact with HMRC must now register under this new regime.

Who needs to act by August 18?

You or your adviser must register by this date if they fall into any of the following categories:

• New tax advisers who have recently started their practice.

• Advisers without an Agent Services Account (ASA), even if they have been practicing for years.

• Advisers currently using only older Self Assessment or Corporation Tax agent accounts.

Why does this matter to you?

If you work with accountants for small business, you need to ensure they are compliant. If your adviser misses this deadline, they may lose the ability to log in to HMRC systems or communicate with the tax office on your behalf. This could lead to delayed filings and unnecessary stress.

At Accountant Search, we only match you with professional firms that stay on top of these regulatory requirements. If you're worried about your current adviser's status, now might be the time to look at our pricing plans and find a verified partner.

Capital Goods Scheme: Significant Simplifications

In a move to reduce "red tape," the government has announced a simplification of the Capital Goods Scheme (CGS) for VAT, effective from 29 July 2026. This scheme is used by businesses to adjust the amount of VAT they reclaim on high-value assets over several years.

Key changes include:

1. Removal of Computer Equipment: Previously, expensive computer hardware was included in the scheme. This has now been removed, simplifying the accounting process for tech-heavy SMEs.

2. Increased Thresholds: The threshold for land and buildings to fall under the CGS has been increased from £250,000 to £600,000.

This is a massive win for SMEs looking to invest in property or office space. By raising the threshold, many more businesses will be exempt from the complex year-on-year VAT adjustments that the CGS requires. It makes the job for your corporation tax accountants much simpler and reduces the risk of errors in your VAT returns.

HMRC Charter Scores and the July 31 Deadline

It isn't all good news. HMRC's latest Charter assessment has been released, and for the third year in a row, the scores are disappointingly low. The Charter is meant to hold HMRC to high standards of service and fairness, but responsiveness remains a major pain point for business owners.

Long wait times on phonelines and delays in processing correspondence mean that SMEs are often left in the dark. This makes it even more important to have a dedicated professional handling your bookkeeping services and tax filings. A good accountant knows how to navigate the HMRC hurdles so you don't have to.

Don't Forget: July 31 Payment on Account

Speaking of HMRC, the 31 July deadline is almost here. This is the second Self Assessment payment on account for the 2025/26 tax year.

If you are self-employed or a director with untaxed income, you must ensure your payment reaches HMRC by midnight on the 31st. Missing this deadline results in immediate interest charges. If your income has dropped significantly this year compared to last, your self-assessment accountant can help you apply to reduce these payments, but you must act quickly.

Disguised Remuneration: New Settlement Terms

For those affected by the loan charge or disguised remuneration schemes, the government has announced new settlement terms. These schemes, which often involved paying contractors in "loans" rather than salaries to avoid tax, have been a source of significant stress for many small business owners and freelancers.

The new terms are designed to provide a more practical path to settlement. If you or your business are involved in a legacy scheme, it is vital to seek professional advice immediately. The "standard" settlement windows are closing, and these new terms may offer a final opportunity to clear the slate with HMRC under more manageable conditions.

Looking Ahead for UK SMEs

The combination of a new government and shifting tax regulations means that the "standard" way of doing things is changing. Whether it's taking advantage of the VAT cut on electricity or ensuring your adviser is registered for MMTAR, staying proactive is the key to SME growth.

At Accountant Search, we specialise in matching you with the right professionals. Whether you need accountants for small business to handle your year-end or corporation tax accountants to navigate new VAT thresholds, we are here to help.

Don't let the 18 August MMTAR deadline or the 31 July payment on account catch you off guard. Take control of your finances today.

Need a hand with your tax? Get a quote from a local accountant now.

---