What's in the news this month - August 2026

Prime Minister Andy Burnham has been urged to reverse changes to Inheritance Tax (IHT) at the upcoming Autumn Budget.

Farmers from around the UK have called on Mr Burnham to honour his pre-election pledge to ‘look again’ at the changes to Agricultural Property Relief (APR) and Business Property Relief (BPR).

Prior to the Makerfield by-election, Mr Burnham acknowledged worries regarding IHT changes and pledged to revisit the matter if he became Prime Minister.

From 6 April 2026, the government implemented a £2.5 million cap per person on 100% relief for APR and BPR. Originally, the reforms were proposed with a £1 million threshold, but this was increased to £2.5 million following pressure from the farming community and business groups.

The Ulster Farmers’ Union (UFU) stated that the government ‘has more work to do’ to rebuild trust with the farming community.

Press release: Farming UK

The UK rate of inflation has risen to 2.9% – its highest level in four months.

The rise was driven by higher energy costs, according to the data published by the Office for National Statistics (ONS).

Following regulator Ofgem’s price cap increase, energy bills rose on 1 July, adding £221 a year to a household’s bill.

Chancellor John Healey stated that the war in Iran is also affecting prices, but stressed that the UK economy is resilient.

Some prices, however, have slowed: food inflation is at 1.3% – its lowest for almost five years.

Responding to the latest figures, Caterina Batog, Research and Economics Analyst at the British Chambers of Commerce (BCC), said: ‘Firms continued to feel the heat from inflation last month, with CPI rising to 2.9%, further fuelling the cost of doing business crisis.

‘Higher household energy bills fuelled by the Middle East crisis played a significant part in July’s CPI rise, and as the Bank of England has warned, energy is likely to push up inflation further in the coming months.’

Press release: British Chambers of Commerce

The UK economy grew by 0.4% between April and June, official data has revealed.

The Office for National Statistics (ONS) found that the summer sunshine and sports fixtures helped the economy grow.

The ONS stated that growth has ‘remained fairly robust’. The services sector and manufacturing propelled growth in the second quarter.

According to the ONS, the economy is currently 1.2% bigger than a year ago.

Responding to the data, Stuart Morrison, Research Manager at the British Chambers of Commerce (BCC), said: ‘Faced with global headwinds from the Iran conflict, the UK economy showed welcome resilience in Q2, growing by 0.4%, according to [the] first estimate.

‘The service sector performed particularly robustly, alongside a welcome return to growth in construction.

‘But the headline figures shouldn’t disguise the cocktail of cost pressures choking long-term business growth.’

Press release: British Chambers of Commerce

Trade body UK Hospitality has urged Prime Minister Andy Burnham to shelve plans to expand the so-called ‘tourist tax’ across the UK.

UK Hospitality has written to the Prime Minister urging him to drop the plans or face losing 33,000 jobs in the UK’s tourism sector.

First proposed under Keir Starmer’s government, the Visitor Levy would give regional mayors the power to impose a tax on tourists, chargeable on overnight accommodation.

Some of the UK’s biggest hospitality providers have opposed the levy, including Whitbread, Greene King and Butlins.

Government plans indicate that funds raised via the levy will be used to finance local infrastructure projects. It stated: ‘Local leaders know what it will take to drive growth in their areas, creating jobs and attracting investment that speak to the strengths of their region.’

However, UK Hospitality has warned that the levy will hit holidaymakers with over £1 billion in tax.

Allen Simpson, Chief Executive of UK Hospitality, said: ‘It’s clear the government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost-of-living crisis. I am pro-devolution, but I am not in favour of an extra tax that will cost 33,000 jobs.’

Press release: UK Hospitality

HMRC has updated its guidance on the temporary reduced rate of VAT applicable to children’s meals, family attractions and tickets.

Between 25 June and 1 September 2026, the rate of VAT on children’s meals and specific attractions is reduced from 20% to 5%.

The new guidance, issued on 27 July, includes additional details on party packages, prepayments and mixed supplies.

The latest guidance also confirms that users of the flat rate scheme should continue to apply their current percentage to calculate their VAT liability, and that the temporary reduced rate doesn’t apply to margin scheme supplies under the tour operator’s margin scheme.

Ed Saltmarsh, Tax Technical Manager at the Institute of Chartered Accountants in England and Wales (ICAEW), said: ‘We highlighted the challenges facing businesses in dealing with the temporary VAT cut, from having to update materials, processes and systems at short notice to dealing with boundary issues, when it was first announced.

‘The fact that HMRC has had to update its guidance one month after the policy took effect highlights the complexity of this measure.’

Press release: ICAEW

HMRC guidance: Revenue and Customs Brief 5

Analysis carried out by the Recruitment and Employment Confederation (REC) has revealed that recruitment of permanent staff stopped falling in July for the first time in almost four years.

The Confederation’s latest survey showed that the index of permanent staff placements reached 50 – this figure separates growth from contraction. Since 2022, it had been below this level.

Commenting on the figure, Maxine Bligh, Chief Membership and Innovation Officer at the REC, said: ‘Rays of light are beginning to break through for the job market as employers revive hiring plans.

‘Remarkably, this is the first month without a decline in permanent placements since Liz Truss resigned as Prime Minister in 2022, underlining just how prolonged the downturn in permanent hiring has been.’

According to the survey, vacancies rose to 47.1, which represents the highest reading since September 2024. Part-time role vacancies also increased at their fastest pace since August 2023.

Press release: Recruitment & Employment Confederation

HMRC will write to nearly 800,000 taxpayers who could have gaps in their National Insurance (NI) record.

The issue affects taxpayers who became self-employed between 2015 and March 2024.

According to HMRC, taxpayers who receive a letter or those who utilise its online pension forecast tool and identify gaps in their NI record ‘will be able to make contributions further than the usual six previous tax years and at the original rate’.

Gaps in NI records may also have arisen where Class 2 National Insurance contributions (NICs) were paid after the 31 January deadline or where payments were used first to clear outstanding tax liabilities rather than NICs.

The letters will be sent to 160,000 taxpayers aged above State Pension age or within two years of State Pension age. These will be sent by summer 2027.

HMRC is urging taxpayers to check their Self Assessment tax returns for previous years to confirm if Class 2 NICs have been made.

Internet link: ICAEW

The Federation of Small Businesses (FSB) has called for the government to help build trust in artificial intelligence (AI) amongst small firms.

It stated that Kanishka Narayan, the government’s new AI Minister, has the ‘opportunity to help small businesses unlock productivity gains from greater AI adoption’.

In a new report, the business group found that 59% of all AI users have seen productivity gains and 24% have increased their revenue.

However, some 92% of small firms still harbour concerns about AI, the report showed. These worries include data security, copyright and liability.

‘It’s great to see the new government taking AI seriously and recognising how important it’s becoming to the economy,’ said Tina McKenzie, Policy Chair at the FSB.

‘The technology is moving at pace, but too many are asking basic questions about data, copyright and liability, and they deserve clear answers.

‘The new AI Minister has a real opportunity to make the UK the best place in the world for small firms to adopt AI, but that will only happen if he puts trust at the heart of the government’s approach.’

Internet link: Federation of Small Businesses

The British Chambers of Commerce (BCC) has set out a three-point plan for the new government.

According to the BCC, Prime Minister Andy Burnham must focus on trade, investment and productivity to support businesses and help the UK economy thrive.

Ensuring that firms have the confidence to invest is essential if they are to expand, create more jobs and adopt new technologies, the BCC said. However, too many businesses face barriers that hold back long-term investment decisions.

The business group has urged the government to create the conditions that encourage investment.

It also called for a full commitment to a fully funded, multi-year workforce plan for the UK planning service to enable increased development, more jobs and stronger local economies.

The BCC called for an acceleration in infrastructure delivery and improved access to supply chains in order to maximise the economic returns from investment, and for the government to reduce unnecessary burdens that increase costs.

Internet link: British Chambers of Commerce