June 17, 2026
Article
The government has announced two practical tax measures that may be relevant to farmers and rural businesses: a temporary cut in the VAT rate from 20% to 5% on certain family-focused activities and children’s meals over the summer holiday period, and an increase in the approved business mileage rate for employees using their own cars.
The temporary VAT rate reduction
The temporary reduction will run from 25 June to 1 September 2026 and is relevant to diversifications such as a farm park, open farms or family visitor attraction, such as indoor play barns, adventure trails, zoos, cultural facilities and heritage sites.
It also covers children’s meals served on the premises in restaurants and cafés, held out for sale only as a meal for children. Whether a meal is held out for sale only as a meal for a child will depend on how it is marketed, presented and priced rather than who consumes it (for example, being included on a distinct children’s menu).
In practical terms, the temporary VAT cut could allow businesses either to reduce ticket prices for visitors, improve margins at a busy time of year, or strike a balance between the two. For some businesses, the relief may also offer a useful marketing opportunity, particularly if the saving is passed on to families and promoted clearly in summer advertising.
The mileage rate change
The mileage rate change will affect travel reimbursement, and tax relief claims more widely across rural businesses. The government announced an increase in the approved business mileage rate for employees using their own cars. The rate is due to rise from 45p to 55p per mile for the first 10,000 business miles in a tax year, with effect backdated to April 2026.
If an employer reimburses mileage using the approved rate, the increase may allow a higher tax-free contribution towards travel costs. Where employees receive less than the approved amount, they may also be able to claim tax relief on the shortfall.
High value Council Tax surcharge
Following the announcement in the Autumn 2025 budget to charge a surcharge on owners of residential properties worth £2 million and above from April 2028, HMRC released its consultation on 19 May.
The annual charge is proposed in bands as follows:
- £2m–£2.5m → £2,500
- £2.5m–£3.5m → £3,500
- £3.5m–£5m → £5,000
- £5m+ → £7,500
The proposal is for valuations to be undertaken by the Valuation Office based on market value, refreshed every 5 years. Freeholders, or leaseholders with a lease granted of more than 21 years, would be in scope for the charge. Trustees would also be liable.
The government is considering relief for properties required for employment with potential recognition that farmers often must live on-site for operational reasons.
This is a key lobbying point for the rural sector, being a further tax on asset value and adding cost and complexity to running a rural business. We will be responding to the consultation and will keep you abreast of changes.