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Guidance

Issue 145 of Agent Update

Published 16 July 2026

© Crown copyright 2026

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This publication is available at https://www.gov.uk/government/publications/agent-update-issue-145/issue-145-of-agent-update

Technical updates and reminders

Developments and changes to legislation and allowances relating to UK tax including:

Tax

Making Tax Digital

HMRC agent services

Agent engagement

Tax

Mandatory payrolling of benefits in kind to launch in phases 

Following extensive engagement with employers, payroll software developers and representative bodies, the government has decided to phase the introduction of mandatory payrolling of benefits in kind (BiK) from April 2027.

From 6 April 2027 to 5 April 2028, mandatory payrolling will apply only to company cars, car fuel, vans, van fuel and medical benefits.

Mandatory payrolling for most other benefits will be introduced from April 2028. 

Phasing delivery in this way will support employers and payroll providers to prepare and adapt in a manageable way.

Employers will be able to register for voluntary payrolling from November 2026 for all other BiKs that have not been mandated to be payrolled from April 2027, including loans and accommodation.

We are considering expansion of the voluntary service to allow for payrolling of Class 1A National Insurance contributions. Further information will be provided in future Agent Updates.

Mandatory payrolling of benefits in kind interim guidance has been updated to reflect phasing and feedback received to date.

We expect the final guidance for phase 1 to be published in Autumn 2026.

Capital Gains Tax — carried interest

Carried interest is a performance-related reward received by investment fund managers. From 6 April 2025, the rate of Capital Gains Tax on carried interest increased from 28% to 32%.

Carried interest (other than income based carried interest) needs to be declared as a Capital Gain on the SA108 section of the individual’s tax return for the tax year 2025 to 2026.

What is changing

As announced at Budget 2024, a new tax regime will apply to individuals receiving carried interest from 6 April 2026. Under the new regime all carried interest will be taxed as trading profits, regardless of its underlying source. This means carried interest will be subject to Income Tax and, where applicable, Class 4 National Insurance contributions. 

HMRC will publish further guidance on how to declare carried interest as trading profits for 2026 to 2027 later this year.

Who is affected

The revised tax regime will apply where an individual performs investment management services directly or indirectly in respect of an investment scheme and carried interest arises to the individual. 

From 6 April 2026, the individual will be treated as carrying on a trade and the carried interest (less any permitted deductions) is treated as the profits of that trade.

Affected individuals may need to consider impacts on their Self Assessment payments on account.

Voluntary National Insurance contributions for periods abroad 

From 6 April 2026, for tax years 2026 to 2027 onwards, the option to pay voluntary Class 2 National Insurance contributions for periods abroad has been removed.

New Class 3 National Insurance contributions applications for periods abroad will require 10 years continuous UK residency, or at least 10 years of paid National Insurance contributions.

If you have clients who work abroad, inform them of the changes that came into effect from April 2026.

If your clients currently pay Class 2 National Insurance contributions abroad:

  • HMRC will write to them in July or August 2026 if they’re affected
  • if they pay by Direct Debit, they should not cancel it — HMRC will collect their final payment for the 2025 to 2026 tax year on 10 July 2026

The changes do not affect the ability of anyone to purchase voluntary Class 2 National Insurance contributions for tax years prior to 2026 to 2027.

HMRC encourages employers to review the latest guidance on:

The changes are being made to ensure that individuals building a State Pension from outside of the UK have a sufficient link to the UK and are paying a fairer price to do so.

Vaping Products Duty and Vaping Duty Stamps scheme — apply for or amend approvals by 31 July 2026

If your clients are involved in the manufacture of vaping products or are an approved customs or excise warehousekeeper they need to be ready for Vaping Products Duty (VPD) and the Vaping Duty Stamps (VDS) scheme being introduced by the government on 1 October 2026.

VPD will be charged at a flat rate of £2.20 per 10ml. This will apply to all vaping liquids, including nicotine-free products. All vaping products released onto the UK market from this date must carry a duty stamp. 

Your clients must make sure they have the right approval in place from 1 October 2026 if they want to produce vaping products, or store vaping products in duty suspense from this date.

What your clients need to do next

Manufacturers

If your clients are manufacturers they must apply for approval if they want to:

  • manufacture vaping products in the UK
  • store vaping products without payment of duty (under duty suspension)
  • purchase or affix vaping duty stamps

Each business must be individually approved. Group applications covering more than one business will not be approved.

Your clients can apply for approval for VPD and the VDS scheme.

If your clients manufacture vaping products after 1 October 2026 without an approval in place, they may receive penalties of up to £10,000 or be subject to criminal prosecution, potentially leading to prison sentences.

Customs warehousekeepers

To store vaping products from 1 October 2026, your clients must make sure their approval covers both:

  • the storage of vaping products
  • excise goods

If your clients already have an approval to store excise goods, they will need to amend their approval so that it covers vaping products. This will not happen automatically. 

Your client should contact their supervising office as soon as possible to do this. They can find the contact details for their supervising office on their customs warehousing authorisation letter.

Excise warehousekeepers

To store vaping products from 1 October 2026, your clients will need to apply to amend their approval to cover vaping products.

Your clients can apply to add, remove or change a warehouse as an authorised excise warehousekeeper.

If your clients do not have approval, they will not be able to legally store duty-suspended vaping products in the UK after this date. This may disrupt their business operations. If your clients do store them without approval, their warehousekeeping approval may be at risk, and they could receive criminal and civil penalties, including potential prison sentences. 

If your clients need a new approval or need to amend an existing approval, they should apply by 31 July 2026.

Application process information

We carry out robust checks on applications, which can take more than 45 working days to process. If your clients do not apply by 31 July 2026, it is likely that they will not be approved by 1 October 2026. 

Read more information about the upcoming changes on the VPD and VPS scheme.

HMRC launches Advance Tax Certainty Service for major investment projects

A first of its kind service for the UK has been launched to provide tax certainty to businesses planning to invest in major projects.

The Advance Tax Certainty Service, launched by HMRC, provides clarity on how UK tax rules will apply to major investment projects prior to investor commitment.

Businesses planning to invest £1 billion or more in qualifying UK expenditure over a project’s lifetime will now be eligible to apply for certainty on key tax issues. This assurance will help them to invest with confidence in the UK.

The service covers the following UK taxes and schemes:

  • Corporation Tax
  • VAT
  • Stamp Duty Land Tax
  • Income Tax
  • PAYE regulations
  • Construction Industry Scheme

Read the Advance Tax Certainty Service manual.

Dan Tomlinson, Exchequer Secretary to the Treasury, said:

The Advance Tax Certainty Service will help boost investment and growth by giving businesses greater confidence and certainty. This will support major investment in the UK and help firms plan for the future and I’d encourage eligible businesses to make full use of the service.

Once businesses have submitted a tax certainty application, HMRC will aim to issue clearance within 90 days. This will be binding for five years, subject to changes in facts and law, and there will be opportunity to renew and extend clearances multiple times on longer-term projects.

The government will continue to evaluate and develop the service after 12 months, including consideration of reducing the £1 billion entry threshold, potentially allowing even more businesses to use the scheme.

Read more guidance about the Advance Tax Certainty Service.

Making Tax Digital

Check out the Making Tax Digital for Income Tax special edition

The first quarterly update deadline for Making Tax Digital (MTD) for Income Tax is 7 August 2026.

On 7 July 2026, we published a MTD for Income Tax special edition of the Agent Update which contains some practical steps and further support to help you and your clients meet the first submission deadline.

The special edition also includes:

  • videos and signposting to helpful guidance such as the software finder tool and Agent toolkit
  • top tips from agents
  • where to go for general support

Student loans within Making Tax Digital

MTD software will hold details of your client’s student loan plan type (1, 2, 4 or 5) or postgraduate loan, or both, using information that the Student Loans Company shared with HMRC.

Quarterly updates calculate an estimate of student or postgraduate loan or both repayments based on your client’s income and the applicable thresholds at that time. These estimates are not payable.

After the fourth quarterly update, you must submit a tax return. MTD software will calculate the actual student or postgraduate loan charge on the tax return using the applicable annual threshold. This replaces the estimates from the quarterly updates.

This final amount is included in your client’s tax liability, which is due to be paid by 31 January, following the end of the tax year and sent to the Student Loans Company.

If your client has a PAYE employment and had PAYE student or postgraduate loan or both deductions taken by their employer, these amounts are pre‑populated and offset against the quarterly estimate and the final amount.

Read more information on student or postgraduate loans when using MTD for Income Tax.

HMRC Agent Services

Winter payment recovery and opt out 

HMRC will recover payment through the tax system for individuals who has an individual total income of over £35,000 and receives either:

  • Winter Fuel Payments in England, Wales and Northern Ireland
  • Pension Age Winter Heating Payment in Scotland 

For PAYE customers, winter payments received in the 2025 to 2026 tax year are currently being recovered through customer’s tax codes during the 2026 to 2027 tax year. 

For Self Assessment customers, HMRC will collect their payment through their tax return for 2025 to 2026.

For online filers, where possible HMRC will include the winter payment on their Self Assessment return which is due by 31 January 2027. Customers should check their winter payment is on their online return and if not, they should include it themselves.

Paper filers will need to include it on their return, which is due by 31 October 2026.

Find out how customers will repay their winter payments.

Opting out of future payments

Anyone who expects their total individual income to be over £35,000, from their private pension, state pension and any other sources, can opt out of future payments rather than have HMRC take steps to recover it.

There is a calculator to help customers work out if their total income will be over £35,000 and if HMRC will take back the Winter payment.

Customers should not contact HMRC to opt out of future winter payments.

Customers in England, Wales and Northern Ireland can contact the Department of Work and Pensions (DWP) to opt out of receiving future Winter Fuel Payments or report a change of circumstance.  

Customers who live in Scotland opt out of receiving future Pension Age Winter Heating Payments on the mygov.scot website. 

Self Assessment payment on account deadline: 31 July — remind your clients

The second Self Assessment payment on account is due by 31 July 2026. Remind clients now to avoid interest charges.

You can direct your clients to pay their Self Assessment bill online.

What clients should do now:

  • check what’s due and pay by 31 July 2026
  • plan ahead if they’re unable to pay in full — they may be able to set up a Time to Pay arrangement online
  • review payments on account if their income has fallen — you can help them apply to reduce them to avoid overpaying

Helpful information you can share with clients:

  • payments on account are advance payments towards the next tax bill, usually due in two instalments (31 January and 31 July)
  • each payment is typically 50% of the previous year’s tax bill (excluding Capital Gains Tax and student loan repayments)
  • if their tax bill was under £1,000 or more than 80% was collected at source, they may not need to make payments on account

You can read more to understand payments on account.

A short, timely prompt from agents will help increase on-time payments. Thank you for assisting your clients to avoid interest charges and additional contact.

Tax adviser registration — check if you need to register by 18 August

Mandatory tax adviser registration is now open. The requirement to register is being rolled out in phases.

If your firm submits returns, makes payments or communicates with HMRC on behalf of clients you must register for an agent services account by 18 August 2026, unless one of the following applies:

  • if you already have a Self Assessment or Corporation Tax account, you’ll need to register from 18 August 2026
  • if you only provide third-party payroll services on behalf of clients and do not interact with HMRC in any other way, you’ll need to register from 18 November 2026
  • if you are a financial services organisation, you’ll need to register from 31 December 2026

Use our checker tool and guidance to check if and when you need to register as a tax adviser with HMRC.

You can use the online service to register now, even if you’re not required to do so until a later date.

If you already have an agent services account, no immediate action is required. HMRC will contact you through your account if any further information is required.

Mandatory tax adviser registration will help create a fairer market for taxpayers and advisers through a single, streamlined digital system.

Complex organisational structures

Tax adviser registration is only intended to apply where there is a genuine third-party advisory relationship. In-house tax teams and advice provided across corporate groups is already out of scope, and HMRC recognises similar structures where there is no genuine third-party advisory relationship and does not intend that those businesses should register.

These structures include:

  • joint ventures
  • investment structures — including real estate investment trusts and managed funds
  • special purpose vehicles and their sponsoring firm
  • partnership models with multiple LLPs
  • trusts and their trustees
  • transitional advice during mergers and acquisitions, and similar

Businesses relying on HMRC guidance in good faith to decide that they do not need to register will be treated as compliant, with no sanctions or penalties, even if HMRC later clarifies that the business should register. HMRC will support businesses to comply within a reasonable timeframe. Further clarification will be provided in guidance.

Multi-factor authentication — do not miss the chance to activate early

Thank you to the more than 6,000 agents who have already submitted a request for early multi-factor authentication (MFA) activation. This means thousands of agents are already set to benefit from the protection of enhanced security for themselves and their clients ahead of the final automatic activation window.

If you missed the first deadline, there is still an opportunity to request early activation for MFA.

What is MFA and why does it matter

The introduction of MFA brings agent accounts in line with the protection already in place for individual and organisation Government Gateway accounts and is part of HMRC’s ongoing work to protect agents and their clients from the evolving threat to online security.

Early activation

Agents can still choose a specific date for MFA to be activated on their account. Choosing an early date means you stay in control of when the change happens and benefit sooner from the enhanced security MFA provides.

To take advantage of this, complete the online form available when signing in to either an agent services account or an HMRC online services for agents account. The form will not appear on accounts where MFA has already been activated.

If you choose to have MFA activated on 19 August 2026, you must submit a form to HMRC by 11:59pm on 31 July 2026.

Once activated, MFA will be applied to all accounts held under the agent identifier (ID) provided. Agents with multiple IDs can choose which ones to activate for this deadline.

Final activation — 28 September 2026 to 15 October 2026

Any remaining agent IDs not activated on 19 August will automatically be included in the final activation window of 28 September 2026 to 15 October 2026. HMRC is unable to give a specific date within this period to agents who are part of this final group. If you are not planning to have MFA activated before this date, you should use the time between now and September to ensure you are fully prepared.

We strongly encourage all agents to prepare in advance for their chosen activation date by selecting your preferred future settings and checking for any existing MFA settings that may be outdated.

Full guidance on how to prepare, including information on administrator roles, access code methods, and the ‘remember me’ function, is available in the Tax Agent’s Handbook.

Reporting suspicious activity in an HMRC online account

Agents can report suspicious activity in their own or their clients’ HMRC online account using a reporting tool on GOV.UK. This makes it quicker and easier to tell us about activity that does not look right at a time that suits you.

Suspicious activity could include:

  • being locked out of an account because details have changed
  • changes to tax records not made by you or your client
  • unexpected letters or payments from HMRC

This could be a sign someone has used personal information to access an HMRC account without permission.

When you report suspicious activity happening in an HMRC online account we will investigate your report and contact you, or your client, with the outcome and any action you need to take.

Agents who have multi-factor authentication (MFA) can also report suspicious activity directly in their online account following these steps:

  1. Sign in to your agent services account.
  2. Select ‘Manage account’.
  3. Select ‘View or change your sign in and security details’.

If you or your client uses third-party software, we also recommend you check it for any suspicious activity like changes to bank details.

You can find guidance on how to reduce the risk of fraud on the online security information for agents.

UK — India Double Contributions Convention

Issue 141 of the Agent Update provided details about a new National Insurance Double Contributions Convention (DCC) between the UK and India.

This DCC entered into force on 15 July 2026.

The UK and India have agreed to extend the detached worker provision in the DCC from three to five years. This means that employees who are sent to work temporarily in India for up to five years, and their employers, will continue to pay National Insurance contributions in the UK. They will not have to pay social security contributions into the Indian scheme.

Similarly, employees sent to work temporarily in the UK by their Indian employer for up to five years will continue to pay social security contributions into the Indian scheme so long as they hold a valid certificate issued by the Indian Employees’ Provident Fund Organisation. They will not have to pay UK National Insurance contributions.

Read more information in HMRC’s published guidance on the social security agreement between the UK and India.

Employees who will remain liable to pay National Insurance contributions whilst working in India should hold a valid certificate of coverage issued by HMRC covering the period of their work in India. This confirms to the Indian Employees’ Provident Fund Organisation that the employee is not liable to pay social security contributions in India.

Applications for certificates of coverage for periods of work in India can now be made using the online CA9107 form.

Corporation Tax late filing penalties: reminder on temporary delay to notices

From 1 April 2026, late filing penalties for Corporation Tax increased. To make sure the correct amounts are used, we have been updating the Corporation Tax system.

The system updates, which were originally expected to complete by 30 June 2026, are now expected to be completed by the end of July. Until then, we have paused issuing automatic notices, so customers do not receive penalty letters showing incorrect amounts.

Companies that file a return after the deadline will still be charged a penalty, and further penalties may apply if the return remains outstanding.

Make your clients aware that they:

  • should continue to file their Corporation Tax returns on time to avoid penalties at the increased rate
  • may receive a penalty notice later than usual if they file late — a delayed notice does not mean no penalty applies
  • do not need to contact HMRC if they have not received a penalty notice but believe one is due — notices will be issued automatically from late July

We will update you through future Agent Updates and other appropriate channels when the system has been updated and we have resumed issuing automatic notices.

Share this information with affected clients.

Providing feedback on HMRC Manuals

HMRC manuals contain technical guidance for HMRC staff and tax professionals. Their primary purpose is to explain HMRC’s interpretation of relevant legislation, which is the basis on which the department makes decisions.

To tell us whether a page is useful, suggest improvements or report a problem with a page, you can use the:

The HMRC Manuals team review all items of feedback on HMRC manuals from internal and external users.

Within the last 12 months we received 1,495 feedback comments and 60% led to guidance improvements. However, the volume is still low compared to the overall usage. Help us improve the content by providing feedback, even if it is to indicate that a page is useful.

Agent Engagement

Sign up for future user research to improve the digital assistant and webchat journeys

Would you be interested in helping improve how HMRC communicates with you online?

HMRC is inviting tax agents to take part in upcoming user research sessions. You can register your interest to take part. 

Government consultation on proposals to tackle lower value tax debts

As part of the Tax Update package announced on 23 June 2026, the government launched a consultation on proposals to tackle lower value tax debts from customers who can afford to pay but persistently choose not to engage with HMRC.

Each year, more than 750,000 such debts, worth over £2 billion, remain uncollected after 9 months and more than 10 contact attempts. The proposals would extend an existing HMRC enforcement power, enabling HMRC to recover these debts through affordable monthly deductions from a customer’s UK bank or building society account.

The consultation outlines a proposed process and stringent safeguards, and HMRC would welcome industry insight and feedback that will help to inform the policy’s development.

Read more information on the consultation on tackling lower value tax debts and how you can respond.

The consultation closes on 28 August 2026.

Modernising the distributions framework — consultation published

The government has published a consultation on modernising the taxation of distributions and repayments of capital from companies. The consultation opened on 23 June 2026 and will close on 14 September 2026.

The government is exploring proposals to reform several areas of the current legislation, bringing it more into line with current commercial practice such as:

  • a review of the tax treatment of ‘new consideration’ and ‘repayments of capital’ in certain scenarios
  • aligning the taxation of distributions from non-UK resident companies with that of distributions from UK resident companies
  • a review of the interaction of the distributions regime with the loans to participators regime, and how the loans to participators regime might be extended to cover loans received from non-UK resident companies
  • proposals for the reform the demergers provisions, the purchase of own shares (POS) relief, and the transactions in securities (TIS) rules

The government is keen to hear the views of stakeholders and welcomes responses from across the agent community who are involved in advising clients on the taxation of distributions and repayments of capital.

Discussions with officials will take place during the consultation period. If you would like to be involved, contact us by emailing distributionsreform@hmrc.gov.uk.

Help improve GOV.UK guidance for employers

HMRC is looking for agents who help businesses to manage employee payrolls. 

If you would like to take part, contact us by email cxduserresearch@hmrc.gov.uk with your name, email address and job title. 

You may be invited to a research session online using Microsoft Teams. We offer a voucher to thank you for taking part. 

Any information you share will be:

  • anonymised

  • confidential

  • used for research purposes only

  • held securely at all times in line with data protection law

Contact Information for professional and representative bodies

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