Another rising cost for businesses

Many business owners are continuing to face increasing financial pressure during 2026 and concerns over possible business rates increases are adding to the uncertainty.

For retail businesses, hospitality operators, offices, workshops and many other commercial premises, business rates remain a significant fixed cost which can have a major impact on profitability and cash flow. Even relatively modest increases can place additional strain on businesses already dealing with higher wage costs, National Insurance increases, inflation and rising financing expenses.

With periodic property revaluations continuing and local authority finances under pressure, many businesses are reviewing how future business rates costs could affect their trading position over the coming years.

Understanding your exposure

One of the first steps is to understand how exposed your business may be to future increases. Some businesses continue to occupy premises that no longer reflect their operational requirements, while others may not have reviewed the accuracy of their rateable valuation for several years.

Businesses should also ensure they are claiming all available reliefs. Depending on circumstances, this could include small business rate relief, rural rate relief, charitable relief or transitional arrangements linked to revaluations.

In some cases, businesses may be paying more than necessary simply because existing reliefs have not been reviewed.

Reviewing your wider property strategy

Business rates should not be considered in isolation. They form part of the wider cost of occupying commercial premises and should be reviewed alongside rent, energy costs, maintenance obligations and financing arrangements.

Some businesses are now reassessing how much space they genuinely require, particularly where hybrid working arrangements or changes in customer behaviour have reduced the need for larger premises.

Others may benefit from renegotiating lease arrangements or considering alternative operating models that reduce fixed property costs.

Planning ahead

For many businesses, the key issue is not simply the current level of business rates, but the uncertainty surrounding future costs. Forward planning can therefore be extremely important.

Preparing realistic cash flow forecasts and profit projections can help identify whether future increases are manageable and whether pricing policies may need to be adjusted to protect margins.

Businesses should also avoid delaying difficult decisions. Early action often creates more options than waiting until financial pressures become more severe.

Taking professional advice

Business rates are sometimes viewed as an unavoidable overhead, but careful planning and regular review can often identify opportunities to reduce costs or improve financial resilience.

If you are concerned about rising occupancy costs, cash flow pressures or the overall profitability of your business, please contact us. We can help you review your financial position, assess the potential impact of future cost increases and consider practical planning options.

A useful point to review your business

For many businesses, summer provides a useful opportunity to pause and take stock before the pressures of the autumn trading period and the approach of the tax year end begin to dominate attention again.

The first half of 2026 has brought continuing financial pressures for many owner-managed businesses. Rising employment costs, ongoing inflation concerns, cash flow pressures and economic uncertainty have all combined to create a more demanding business environment. Against this backdrop, a mid-year business health check can be an extremely valuable exercise.

Reviewing cash flow

One of the first areas to review is cash flow. Even profitable businesses can experience financial strain if customer payments are slowing down or costs are rising more quickly than expected. Reviewing debtor levels, payment terms and future tax liabilities can help identify potential pressure points before they become more serious problems.

Businesses should also consider whether existing overdraft or funding arrangements remain suitable, particularly if borrowing costs have increased over recent months.

Are your profit margins still healthy?

This is also a good time to review profitability. Many businesses have experienced rising wage, supplier and financing costs over the past year, but some have been reluctant to adjust their pricing. A careful review of margins may reveal that certain products, services or customers are no longer delivering the returns they once did.

Small pricing adjustments or improved cost controls can sometimes make a significant difference to overall profitability.

Reviewing systems and tax planning

Business owners should also consider whether their bookkeeping and management information systems are providing accurate and timely information. With Making Tax Digital now applying to increasing numbers of self-employed individuals and landlords, maintaining reliable digital records is becoming more important than ever.

Tax planning should form part of any summer review. Waiting until the end of the tax year can reduce the number of planning opportunities available. Reviewing remuneration strategies, pension contributions, capital expenditure plans and future profit expectations at an earlier stage can often create greater flexibility.

Looking ahead

For family businesses, summer can also provide an opportunity to review longer-term plans. Succession arrangements, shareholder structures and inheritance tax exposure are areas that are often postponed until problems arise, but early planning usually creates more options and better outcomes.

Finally, many business owners benefit from stepping back and reviewing wider business risks. Cyber security, insurance cover, staff retention, customer concentration and borrowing arrangements are all areas that deserve periodic attention.

A summer health check does not need to be complicated, but it can provide valuable reassurance and help identify opportunities for improvement before the busy final quarter of the year begins.

If you would like help reviewing your business finances, cash flow, tax position or future plans, please contact us. A timely review today could help avoid more significant problems later in the year.

Businesses are being urged to remain alert after Companies House and the Intellectual Property Office (IPO) issued a joint warning about unsolicited payment requests and misleading invoices being sent to UK companies.

According to the government announcement, some businesses are receiving letters and emails that appear official and request payment for services connected with Companies House filings or intellectual property registrations. In many cases, the organisations sending these requests are not connected with government and may be charging inflated fees for services that are either available directly from official sources at a much lower cost or free of charge altogether.

Newly incorporated businesses and companies filing intellectual property applications can be particularly vulnerable because their details are publicly available and may be targeted by third parties seeking to imitate official correspondence.

The warning highlights that some requests are designed to look convincing, using official sounding names, formal layouts and references to statutory obligations or deadlines. Business owners may therefore assume that payment is mandatory when, in reality, the request relates to an optional third-party service.

Companies House and the IPO are advising businesses to carefully check all payment requests before making payment and to verify whether correspondence genuinely originates from an official government source.

Warning signs can include:

� requests for unusually high fees,

� payment demands shortly after incorporation or trademark applications,

� vague descriptions of services,

� unofficial bank details,

� pressure to pay quickly,

� and correspondence from organisations with names similar to government bodies.

Businesses should also remember that official Companies House fees and IPO fees can normally be verified directly through GOV.UK websites.

The warning serves as a timely reminder that fraud attempts against UK businesses continue to evolve, particularly where publicly available company information can be used to create apparently credible requests for payment.

Business owners may wish to ensure that staff responsible for accounts payable or company administration understand the risk of misleading invoices and know how to verify requests before payment is authorised.

Simple internal controls, such as confirming new suppliers independently, checking website domains carefully and reviewing unusual invoices with advisers before payment, may help reduce exposure to this type of scam.

For many years, employees and directors using their own cars for business journeys have relied on HMRC’s approved mileage allowance rates as a simple way to recover motoring costs. However, despite the recent increase in the approved rate from 45p to 55p per mile from 6 April 2026, many motorists may still find themselves substantially out of pocket once inflation and rising running costs are taken into account.

The original 45p per mile rate was introduced in April 2011 and remained unchanged for fifteen years. During that period the UK experienced significant inflation, particularly in the years following the pandemic, when fuel prices, insurance premiums, servicing costs and vehicle finance charges all rose sharply.

When inflation is taken into account, the original 45p rate introduced in 2011 would need to be worth approximately 65p to 67p per mile by March 2026 to provide the same real level of reimbursement. This means that, even after the increase to 55p per mile, the approved allowance still falls noticeably below the inflation adjusted equivalent.

For business owners and employees who regularly travel for work, the financial impact can become considerable. A driver covering 10,000 business miles per year under the old 45p system would have received £4,500. Had the rate increased in line with inflation since 2011, the equivalent reimbursement could have been closer to £6,600.

The issue is not simply one of fuel prices. Modern motoring costs now include increasingly expensive insurance, higher repair and servicing charges, tyre replacement costs, financing expenses and depreciation. Electric vehicles may reduce fuel expenditure, but they can still involve substantial purchase and repair costs.

Many professional bodies and business groups have argued for some time that the approved mileage allowance rates no longer reflected the true cost of business motoring, particularly for smaller businesses where directors and staff regularly use private vehicles for work related travel.

The recent increase to 55p per mile is therefore a welcome step, but many motorists may feel it does not fully address the cumulative effect of fifteen years of inflation.

Businesses should also remember that mileage claims need to be properly recorded and supported by accurate business mileage logs. Poor record keeping can lead to HMRC challenges and potentially denied claims.

If you would like advice on mileage claims, staff reimbursement policies, company car alternatives or the wider tax implications of business travel, please contact us.

Dividends are taxed differently from other types of income, with separate allowances and tax rates that depend on your overall level of income. You do not pay tax on dividends that fall within your Personal Allowance (2026-27: £12,570), and there is also a separate tax-free dividend allowance of £500 each year. Any dividend income above these allowances is taxable.

The rate of tax you pay on dividends depends on your Income Tax band. 

For the 2026-27 tax year, the rates are:

• Basic rate: 10.75%
• Higher rate: 35.75%
• Additional rate: 39.35% 

To determine which rate applies, your dividend income is added to your other income. This means dividends can push you into a higher tax band and / or can be taxed across more than one rate.

If you receive up to £10,000 in dividends you can ask HMRC to change your tax code and the tax due will be taken from your wages or pension, or you can enter the dividends on your self-assessment tax return, if you already fill one in. You do not need to notify HMRC if the dividends you receive are within your dividend allowance for the tax year.

If you have received over £10,000 in dividends, you will need to complete a self-assessment tax return. If you do not usually send a tax return, you need to register by 5 October following the tax year in which you received the relevant dividend income.