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Guidance

Issue 146 of Agent Update

Published 20 August 2026

© Crown copyright 2026

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This publication is available at https://www.gov.uk/government/publications/agent-update-issue-146/issue-146-of-agent-update

Technical updates and reminders

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

Tax

Borders and trade

Making Tax Digital

HMRC agent services

Agent engagement

Tax

Changes to the process for applying for an Inheritance Tax reference number

The process for getting an Inheritance Tax (IHT) reference number has changed. To use the new system, you now need to provide an email address.

If you need an IHT reference number, you should now use the online service to apply for an Inheritance Tax reference (IHT422). Paper Inheritance tax (IHT422) applications will continue to be accepted where needed.

What you need to do

Update any saved links, bookmarks, guidance, and local processes to ensure you are using the GOV.UK service going forward. Any saved links to the previous application route must be removed, as they will no longer work.

Borderline excepted estates — supporting agents to get Inheritance Tax (IHT) reporting right

To support agents who may need to report Inheritance Tax, HMRC is issuing an educational One to Many letter under the Borderline Excepted Estates project.

This is a preventative and educational exercise, not a compliance investigation. The aim is to help agents and their clients get things right first time, reducing the need for downstream checks later, by providing clear and practical guidance.

Since changes to the excepted estate regulations in January 2022, more non-taxpaying estates have been able to apply for a grant of probate or confirmation as excepted estates without needing to first submit a full IHT account (IHT400).

However, HMRC has noticed common misunderstandings about eligibility and reporting for the various nil rate band (NRB) allowances. Most notably, agents should not take the residence nil rate band (RNRB) and any brought-forward (transferable) allowance into account when they consider if the estate is an excepted estate. The downsizing allowance or transferable allowance also do not apply automatically and need to be claimed in an IHT400.

By not sending an IHT400 when they should, estates may find later that incorrect calculations or out of time claims cause problems and they may face unexpected tax and penalties.

The educational letter is being sent to agents who have submitted excepted estate grant applications with estate values at or around the various NRB thresholds (£325,000, £500,000, £650,000, £825,000 and £1 million). Its purpose is to identify common errors and misunderstandings around each of the NRB allowances, so that agents can avoid these pitfalls and claim them correctly.

The guidance encourages agents to ensure that estate valuations and allowance claims are accurate and well supported at the point of deciding whether they should submit an IHT400. Where there is any uncertainty about eligibility or values, agents are reminded that submitting an IHT400 account may be the most appropriate route. Relevant GOV.UK guidance is also signposted to support agents in checking the rules.

Read more about excepted estates in chapter IHTM06000 of the Inheritance Tax manual.

Phased roll-out for mandatory payrolling benefits in kind — actions for agents to take now

HMRC is encouraging agents to make sure their employer clients are getting ready for reporting benefits in kind (BiKs) in real time.

Start having these conversations with your employer clients now, if you have not already done so. 

From 6 April 2027 to 5 April 2028, mandatory payrolling will be introduced in phases Phase 1 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. This phased approach will support employers and payroll providers to prepare and adapt in a manageable way.

Supporting your employer clients to communicate with their employees

It is important that employees are made aware of how the changes in phase 1 will affect them. Early communication is important to help them understand how this might affect their tax codes and take-home pay.

Agents can support employers to explain how for phase 1 of mandatory payrolling BiKs, from April 2027, employees:

  • who currently pay tax in arrears on BiKs will be paying tax in real time for those BiKs included in payrolling for phase 1

  • will be paying these BiKs in real time in the year they are received, and will no longer have a deduction in their tax code to pay tax on an estimated benefit

Where your employee is also paying back an underpayment of tax on a benefit provided in a previous year, it may feel from April 2027 that they are ‘paying tax twice’ on the BiKs. Explain to them that this is not the case.

In this instance, employers will need to:

  • talk to their employees now, ahead of the changes

  • avoid terminology such as ‘double taxation’ as it could imply that employees are paying additional tax which is incorrect

  • prepare for instances where employees are paying for the current year as well as underpayments for previous years

  • advise employees to contact HMRC if they are experiencing any financial hardship due to the overlapping taxation

Read information on how you can support your employer clients to communicate these changes.

Preparations for mandatory payrolling BiKs for phase 1

In preparation for phase 1, inform your employer clients that they should:

  • make a list of all the BiKs they offer and would normally report to HMRC on a P11D form

  • ensure their payroll software can handle real time reporting of BiKs for phase 1 and complies with HMRC’s requirements — this will need to be in place by April 2027

  • work out how they will manage employees who leave or join during the tax year, or benefits that change in value

  • understand the process for dealing with any underpayment or overpayment so they can support employees

Read more information on mandatory payrolling of BiKs and expenses — interim guidance and legislation.

Voluntary payrolling

From November 2026, employers can register for voluntary payrolling for all other BiKs that have not been mandated to be payrolled from April 2027. This includes loans and accommodation.

HMRC expects the final guidance and legislation for phase 1 to be published in autumn 2026. 

We appreciate the efforts of agents who are already supporting and preparing for the changes. 

Issuing of P800s

At the end of the tax year, HMRC checks its PAYE records to confirm whether customers have paid the correct amount of tax. This year, around 45 million accounts will be reviewed, with P800 letters already being issued and reconciliation continuing through to November 2026.

Following the reconciliation process:

  • where tax has been overpaid, we refund it
  • where tax has been underpaid, we collect it in a planned and managed way

Overpayment letters have been prioritised and sent first. Customers due a refund can claim online through GOV.UK or the HMRC app and should receive payment within five working days. In some cases, HMRC will automatically issue a cheque.

Where too little tax has been paid, the outstanding amount is usually collected automatically through PAYE, with no action required from the customer.

You may see an increase in client queries over the remainder of the summer and autumn. Remind clients to read their P800 carefully, check the figures against their own records, and follow the instructions in the letter.

It is important to note that HMRC will never ask customers to claim a refund by replying to a text message or email. Customers should be cautious if they receive unexpected messages about P800 refunds.

Read more information on tax overpayments and underpayments.

Guidelines for Compliance GfC19 — help with short-term business visitors — GfC19

HMRC has recently published new Guidelines for Compliance (GfC) for Help with short-term business visitors. Short-term business visitors (STBVs) are individuals who normally work overseas but come to the UK for short periods to carry out employment duties.

These guidelines are primarily for UK employers with overseas employees working in the UK on a short-term basis. However, they will also be useful to overseas employees, professional advisers and representative bodies supporting customers in this area.

They provide practical support by:

  • explaining the Income Tax, National Insurance contributions and PAYE treatment for STBVs
  • highlighting common errors and areas of risk identified by HMRC
  • helping customers get their tax right first time
  • advising what records and evidence should be retained
  • explaining what to do if a mistake is made

More information on GfC, including other publications, can be found on the Guidelines for Compliance collection page.

Guidelines for Compliance — temporary reduced rate of VAT for children’s meals, tickets and family attractions — GfC8

HMRC has published a new chapter within Help with VAT compliance controls (GfC8) covering the temporary reduced rate of VAT for children’s meals, tickets and family attractions). The chapter is intended to support businesses affected by the temporary relief, which applies from 25 June 2026 to 1 September 2026.

The chapter complements Revenue and Customs Brief 5 (2026) and focuses on practical compliance controls rather than technical VAT interpretation.

It provides practical support by explaining:

  • governance arrangements and compliance controls
  • systems and process considerations
  • audit trail and evidence requirements
  • approaches to monitoring compliance during the relief period
  • considerations when returning to the standard rate of VAT after the temporary relief ends.

Read more information on Guidelines for Compliance including other publications in the series.

Updates to Double Taxation individual and company form guidance for UK REITs

A reminder that HMRC has updated several Double Taxation forms and guidance relating to UK Real Estate Investment Trusts (REITs).

These updates ensure the guidance is aligned with HMRC’s current position.

The changes include clarification of:

  • when certification by an overseas tax authority is required
  • how certification by an overseas tax authority should be provided
  • the requirements for letters of authority where agents act on behalf of claimants

Agents must use the latest versions of these forms and notes which will be available on GOV.UK:

Using the correct versions will help avoid delays when claims are submitted.

Corporation Tax late filing penalties: automatic notices resume

From 1 April 2026, late filing penalties for Corporation Tax increased. To make sure the correct amounts were used, we updated the Corporation Tax system. We temporarily paused issuing automatic penalty notices so customers would not receive penalty letters showing incorrect amounts.

The system updates are now complete, and automatic notices are being issued again.

Companies that file a return after the deadline remain liable for a penalty at the increased rates, and further penalties may apply if the return remains outstanding. Some clients who filed late may receive notices later than usual while processing returns to normal.

Advise your clients that they:

  • should continue to file their Corporation Tax returns on time to avoid penalties at the increased rate
  • remain liable for penalties if they file late, even if a notice was not issued during the temporary pause
  • do not need to contact HMRC if they were expecting a notice that was delayed, as notices are now being issued automatically

You should share this information with affected clients.

Borders and trade

Customs Modernisation call for evidence

At tax update 2026 in June, HMRC launched a call for evidence on Customs Modernisation, inviting businesses, intermediaries, and other stakeholders to help shape the future of the UK customs regime.

The call for evidence seeks views on how international trade is evolving and what this means for customs processes in the UK. It aims to identify where the current system is working well, how it supports modern trade and where further improvements could be made.

HMRC has already made significant progress in modernising customs through initiatives such as artificial intelligence (AI) and digitalisation pilots, alongside ongoing improvements to the online Trade Tariff. However, there is still more to do to explore more innovative approaches and ensure the customs regime continues to meet the needs of traders.

The call for evidence seeks views on:

  • how your business and supply chains are changing
  • where digitalisation creates opportunities, and where the current challenges to realising these are
  • how various actors in the border ecosystem, such as intermediaries and software providers, might be affected
  • whether the current approach to customs authorisations works well for businesses

The call for evidence is open until 11:59pm on 15 September 2026. We are particularly interested in hearing your experiences of trade digitalisation, your views on how effectively the UK customs regime supports modern trade and where you think further changes may be needed.

Read more information and details of how to respond in the full consultation document.

You can also access a recording of the 6 July stakeholder session on YouTube which provides further information.

If you have any questions, contact the customs modernisation team by email: customsmodernisation@hmrc.gov.uk.

Carbon Border Adjustment Mechanism (CBAM)

The UK Carbon Border Adjustment Mechanism (CBAM) will be introduced from 1 January 2027.

CBAM places a carbon price on highly traded, carbon intensive products imported into the UK, ensuring they face a comparable carbon price to that paid by UK manufacturers.

Sectors who will be affected

CBAM will apply to specific goods imported into the UK from 1 January 2027 from the following sectors:

  • aluminium
  • cement
  • fertiliser
  • hydrogen
  • iron and steel

CBAM guidance

To help businesses prepare, HMRC has published new guidance on CBAM.

This guidance will enable them to check whether their goods are in scope, understand their record keeping obligations and check whether they may need to register.

HMRC will also publish guidance in the autumn on monitoring, reporting and verifying embodied emissions.

Keep your customers up to date on CBAM

Use the CBAM communications resources included with the guidance to help keep your members, customers and supply chains up to date.

A YouTube video, a leaflet and social media assets are also included to help you share the information.

To stay up to date, register with the CBAM mailing list by emailing cbampolicyteam@hmrc.gov.uk.

Making Tax Digital

Making Tax Digital for Income Tax — if the first quarterly update deadline was missed

The first quarterly update deadline for Making Tax Digital (MTD) for Income Tax was 7 August 2026. If you or your client missed this deadline, you should send your client’s first quarterly update to HMRC as soon as possible.

These are the actions you need to take now:

For extra support, use our MTD interactive tool to check if your client needs to sign up and when.

You can also use our software finder tool to access our list of all compatible software.

Recently, we published a special edition Agent Update which contains some practical steps and further support to help you and your clients meet your submission deadlines.

Exemptions

You should check if any of your clients are exempt from MTD for Income Tax. If they are exempt, they will not have to use MTD for Income Tax, but they must continue to report their income and gains in a Self Assessment tax return, as normal.

If you think your client is digitally excluded, you can submit an exemption application on their behalf, based on their personal circumstances.

You can now apply for an exemption from MTD for clients who would otherwise need to start using MTD for Income Tax from 6 April 2027.

HMRC agent services

Consultation on the tax treatment of predevelopment costs

The government is consulting on the tax treatment of predevelopment costs.

Predevelopment costs are incurred in the early stages of an investment project before work begins. They can include costs to assess feasibility, obtain regulatory approvals and carry out preparatory activities.

The consultation seeks views and evidence on:

  • predevelopment costs businesses incur
  • the tax treatment of those costs
  • whether businesses face uncertainty when applying the rules
  • the impact of the rules on investment decisions

The consultation closes at 11:59pm on 21 September 2026.

Read more on the consultation tax treatment of predevelopment costs.

Submit your response by email to predevcosts@hmtreasury.gov.uk.

Child Benefit information now pre-populated in Self Assessment tax returns

HMRC has introduced the pre-population of Child Benefit information in online Self Assessment returns, using existing information it already holds. 

This means that High Income Child Benefit Charge is calculated correctly and reported on time.

Around 300,000 Self Assessment customers will benefit from having their or their partner’s Child Benefit payment information pre-populated, making it faster and easier to complete a return. 

Where pre-populated figures are displayed, customers can amend them if they believe they are incorrect. If changes are made, an explanation must be provided. 

If HMRC does not hold all the relevant payment information, the Child Benefit section will need to be completed manually. 

Customers who complete a Self Assessment return solely to pay the High Income Child Benefit Charge may also wish to check whether they are eligible to use the PAYE service instead.

More guidance is available on High Income Child Benefit Charge and paying the High Income Child Benefit Tax Charge through PAYE.

Multi-factor authentication update: final activation approaches

More than 13,000 agents opted for early multi-factor authentication (MFA) activation, meaning over 20,000 agent accounts now have MFA enabled. They are already benefiting from the enhanced protection MFA provides for themselves and their clients.

Understand why multi-factor authentication matters

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

Check when multi-factor authentication will be activated

If you did not submit a request for early activation, your accounts will now be included in the final activation window, running from 28 September 2026 to 15 October 2026. This means your account will be activated at some point during these dates. HMRC is unable to provide a specific activation date within this window.

Preparing now is the best way to ensure the transition to MFA is smooth and does not disrupt your work or your clients’ service.

Prepare for multi-factor authentication

We strongly encourage all agents who have not yet had MFA activated to use the time between now and late September to get ready by:

  • understanding the access code methods available to you and choosing the one that best suits your way of working

  • selecting your preferred future settings before activation takes place

  • checking for any existing MFA settings that may be outdated and need updating

  • reviewing administrator roles on your account to ensure the right people have the right access

Full guidance is available in the Tax Agent’s Handbook. We recommend reviewing this guidance now, rather than waiting until the final activation window opens, so that when MFA is applied to your account, there is no disruption to you or the clients you represent.

Tax adviser registration: next registration window now open

The second phase of mandatory tax adviser registration is now open. This window applies to tax advisers who have a Corporation tax or Self Assessment agent account but do not currently hold an Agent Services Account (ASA).

Firms can use the HMRC checker tool for guidance on registering as a tax adviser.

Complex organisational structures guidance updated

Tax adviser registration only applies where there is a genuine third-party advisory relationship. In-house tax teams and advice provided across corporate groups is already out of scope.

We have published further clarification in the Mandatory Tax Adviser Registration manual.

Agent engagement

Help us improve GOV.UK guidance

HMRC is looking for agents who support customers to claim a tax refund through Self Assessment.

If you would like to be involved, 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

Upcoming research on experiences of tax debt and engagement with HMRC

HMRC is carrying out research to better understand the experiences of people with tax debt and the factors that affect how they engage with HMRC.

We would like to hear from tax agents who support clients with tax debt and financial difficulties. This includes any other challenges that may affect their ability to engage with HMRC.

As part of this research, HMRC researchers will conduct online interviews with agents to learn more about the experiences of the people they support. The research will explore barriers to engagement, decision-making and the support people may need when dealing with tax debt.

If you choose to take part, you will be invited to a 60 minute interview on Microsoft Teams. Taking part is voluntary. Any information you provide will be treated in confidence and used for research purposes only.

This research is separate from any consultation activity. If you have views on current or future consultations, you should continue to respond through the appropriate consultation channels.

To participate in this research, complete the online registration form.

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 1,498 feedback comments and 62% 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.

Contact Information for professional and representative bodies

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