HMRC have published their Agent Update for January 2026. We have summarised the key content, including a reminder of the changes to voluntary National Insurance Contributions (NICs) for periods abroad, guidance on how to prepare your clients for Making Tax Digital (MTD) for Income Tax and tips for making a valid Overpayment Relief claim.
Voluntary National Insurance Contributions (NICs) for periods abroad
In Budget 2025, the government announced updates to voluntary NICs for time spent abroad.
Starting April 2026:
- Voluntary Class 2 NICs for periods abroad will end.
- New Class 3 NIC applications for time abroad will need 10 years of continuous UK residency or NICs.
If you have clients who work abroad, inform them of the changes taking effect from April 2026 and equip them with the knowledge needed to make informed decisions.
If your clients currently pay Class 2 NICs abroad:
- HMRC will write to them from July 2026 if they are affected.
- If they pay by direct debit, they should not cancel it.
- HMRC will collect their final payment for the 2025-26 tax year on 10 July 2026.
The changes do not affect the ability of anyone to purchase voluntary NICs for tax years prior to 2026-27.
Further details and guidance will be published later.
These changes aim to ensure that people building a state pension from outside the UK have a strong enough connection to the UK and are paying an appropriate, fair price.
- A broader review of voluntary NICs policy is planned to ensure the system remains fair and effective.
See Overseas & Residence: Autumn Budget 2025
Overseas Workday Relief (OWR) and the character of earnings paid
HMRC has published new guidance on globally mobile employees: OWR and the characterisation of earnings.
- Where an employee benefits from OWR in a pre-April 2025 tax year, it is necessary to determine to what extent their general earnings for that year relate to duties performed in or outside the UK, and when any overseas earnings are remitted to the UK.
- The guidance clarifies how an employer may determine the composition of a payment of earnings and the extent to which tax paid by PAYE should be considered as UK or overseas earnings.
- Employees will generally be able to use the same day methodology they currently use, along with an approach that provides additional flexibility.
- Those filing or amending Self Assessment returns will want to familiarise themselves with the new guidance and apply it where relevant.
For cases that are under review with HMRC, colleagues within HMRC will contact agents to discuss the appropriate way forward in individual cases.
- For cases that have been closed, HMRC will not reopen them. Once HMRC make a decision and closes a case, the taxpayer, at that time, could exercise their right of appeal if they disagreed with HMRC's decision.
- If the taxpayer chooses not to appeal at that time, then that decision becomes final when the statutory deadline for appealing passes.
See Overseas Workday Relief (OWR)
Foreign Income and Gains (FIG) used as collateral for loans: updated guidance
The use of FIG as collateral for loans is a specialist area within the remittance basis rules.
- HMRC have received several technical questions seeking clarification on how the rules apply in practice and HMRC's position where the value of the collateral exceeds the loan amount.
- In response, HMRC have reviewed their position and updated the guidance to ensure it accurately reflects the legislation.
- The updated guidance provides clearer examples of how the rules operate:
- The updated guidance does not reflect any change in the underlying legislation.
Overpayment Relief claims: top tips for making a valid claim
HMRC have updated their online guidance so individuals and agents can clearly see what information to include when submitting an Overpayment Relief claim.
The two top reasons for an Overpayment Relief claim being rejected are:
- The claim does not state whether or not the taxpayer has previously made an appeal in connection with the payment or assessment. The term 'appeal' must be used.
- The declaration that the claim is correct and complete is not signed by the correct person. It must be signed by the taxpayer or an officer of a company (if the claimant is a company) and not a tax agent.
As a reminder, Overpayment Relief claims must be made in writing and must state:
- That the claim is for Overpayment Relief.
- The tax year for which the claimant thinks they have paid too much tax, or too much tax has been assessed.
- Why too much tax has been paid or assessed.
- How much has been overpaid or overassessed.
- If an appeal has, or has not, been previously made for the same payment or assessment. The term 'appeal' must be used.
The claim must also include a declaration saying the details given are correct and complete to the best of the information and belief of the person making the claim.
The declaration must be signed by:
- The taxpayer, not a tax agent, if the claim is for an individual.
- A company officer, not a tax agent, if the claim is in respect of a limited company.
- The nominated partner, if the claim is in respect of a partnership.
If the claim is for repayment of tax, then there must be documentary proof of the tax deducted, as HMRC may ask for this later.
If a claim does not include all this information, it will be rejected, and the individual or agent will have to resubmit a new claim.
Preparing taxpayers for Making Tax Digital (MTD) for Income Tax: awareness letters update
Following the first batch of taxpayer awareness letters that were sent in November 2025, HMRC will send more awareness letters in February and March 2026 to taxpayers who have submitted their 2024-25 tax return.
These awareness letters will:
- Inform taxpayers that, based on the information they have submitted, they will need to use MTD for Income Tax from April 2026.
- Inform taxpayers of what they need to do to prepare.
- Include a QR code linking them to GOV.UK guidance.
The letters will also advise taxpayers to contact their tax agent to discuss what they need to do.
- This means that your clients may contact you with questions.
Support and resources for agents: MTD
You should start reviewing your current clients' tax affairs and sign up those who will need to use MTD for Income Tax from April 2026.
- For guidance on how to prepare for and use MTD for Income Tax, make sure to visit the MTD agent step-by-step guide.
HMRC also provides some resources which can help you get ready:
- Register for specialist MTD support: these sessions will give agents direct access to HMRC specialists for tailored MTD readiness agent support.
- Share HMRC's communications resources: align your MTD messaging with what your clients may see from HMRC and share ready-made products.
- Sign up for a webinar: get ready for MTD by joining a webinar, which covers planning steps, actions to take now, how to sign up clients for April 2026 and Q and A.
You can also check out HMRC's recorded webinars.
Make sure to check out the new 'Ready Steady File' newsletter
Catch up on the latest edition of Ready Steady File edition 3, for the latest news, resources and important milestones in the MTD for Income Tax beta testing journey.
- You can find Previous editions of Ready Steady File.
GOV.UK One Login: what agents need to know
HMRC will start to use GOV.UK One Login in the fourth quarter of the 2025-26 tax year, starting with a small proportion of individual taxpayers who do not already have a government gateway account.
The changes to the login process mean that:
- Existing taxpayers will continue using their government gateway as normal.
- New taxpayers to HMRC, and without a government gateway, will be asked to create a GOV.UK One Login.
- The rollout will be gradual, starting with a small number of new registrations before gradually increasing.
- HMRC changed their sign-in pages in November 2025 to introduce an additional option: GOV.UK One Login, alongside the existing government gateway account.
If clients ask about GOV.UK One Login, advise them that if they have an existing government gateway account, they do not need to do anything differently to access HMRC services until prompted.
- Agent accounts will move to GOV.UK One Login at a much later stage.
Key points in this section are:
- Taxpayers should choose to sign in with the government gateway option to continue to sign in with their government gateway details, as they normally do.
- Taxpayers who do not already have a government gateway account or a GOV.UK One Login should select the new user option and will be guided to create the appropriate account.
Self Assessment deadline: act now
As we step into 2026, it serves as a timely reminder that the Self Assessment deadline is fast approaching.
- HMRC are urging taxpayers and tax agents not to leave it until the last minute and to file well ahead of the deadline on Saturday, 31 January 2026.
Here are some important things to remember:
- Registrations and reactivations: make sure your client is registered for Self Assessment, or if they have filed before but did not last year, that their Self Assessment account is reactivated before submitting their tax return.
- File now: filing now means you will have time to get the support, if needed, during the weekdays in the lead up to the deadline. By doing so, you will also avoid the deadline rush and can relax knowing your client's tax affairs are sorted.
- Deadline day: on Saturday 31 January, HMRC will be running an enhanced webchat service for taxpayers and tax agents from 8 am to 4 pm.
- More advisers will be available to answer your webchat queries and offer real-time support.
- The webchat service on deadline day is available for queries about 2025-26 tax returns and payments, online services and bereavement.
- There is a call-back process for vulnerable taxpayers requiring extra support or complex case team assistance.
The Self Assessment helpline and agent dedicated line will close on Friday, 30 January 2026 and reopen on Monday, 2 February 2026.
- HMRC's online agent services, GOV.UK website, digital assistant and HMRC YouTube videos are available 24/7.
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.
All pages on GOV.UK contain feedback routes in the footer of each page as well as the contact GOV.UK form that allows you to tell HMRC whether a page is useful, suggest improvements or report a problem with a page.
- The HMRC manuals team review all items of feedback on HMRC's manuals from internal and external users.
- You can submit feedback on HMRC manuals' technical guidance.
GfC7 update: offshore procurement hubs and value chain analysis in transfer pricing
HMRC have released an important update to their GfC7.
- They have expanded their guidance on transfer pricing risk with two new subparts:
- 2.2.8: value chain analysis.
- 3.8: offshore procurement hub.
- These additions reflect HMRC's evolving approach to identifying and mitigating compliance risks in increasingly complex multinational structures.
Value chain analysis: enhancing functional accuracy
- Part 2.2.8 introduces value chain analysis as a best practice tool to support accurate delineation of transactions.
- While not mandatory, HMRC recognise value chain analysis as a valuable method for understanding how value is created across a multinational enterprise.
- Value chain analysis helps clarify the economically significant functions, assets and risks within a group.
- HMRC encourage businesses to apply value chain analysis rigorously and contemporaneously, especially where the UK entity plays a strategic role in value creation.
- The guidance outlines seven best practice steps for conducting a value chain analysis, including mapping the value chain, identifying key value drivers and evaluating profit attribution.
- Importantly, value chain analysis should be tailored to the UK entity and not rely solely on generic master file content.
Offshore procurement hubs: managing policy design risk
- Part 3.8 addresses offshore procurement hubs.
- For UK businesses receiving procurement goods or services from an offshore connected party, the addition of part 3.8 contains a helpful explanation of how HMRC understands the role, value generation, rewards and types of costs, savings and functions performed in these specific arrangements.
- The GfC is helpful for businesses in understanding the key risks in planning, scope, pricing, structure, methodology and comparability and offers practical insights into best practice.
- Helping to support multinational enterprises to spot risks and take action may mitigate the risk of enquiry.
- While the risk framework does not guarantee immunity from enquiries or penalties, it provides insight into the risk process and why a business may be selected for an enquiry.
- HMRC have provided suggestions when selecting a methodology and considering economically relevant characteristics for comparability.
- They advise including insights about testing outcomes, records and documentation that multinationals should keep as evidence to support the arms' length principle included in their filed return.
- The guidance sets out high-risk indicators, such as:
- Procurement hubs located in low-tax jurisdictions with limited substance.
- Flat-rate commission models that over-reward hubs based on volume alone.
- Lack of performance tracking or savings measurement.
- Excessive reward without corresponding functionality or risk assumption.
- Best practice recommendations include:
- Conducting a robust functional analysis pre-and post-restructuring.
- Using value chain analysis to assess the procurement hub's role in value creation.
- Benchmarking returns against comparable independent procurement entities.
- Periodically re-baselining savings and documenting allocation methods.
Tax agents should ensure clients are aware of these changes and consider whether their documentation and pricing models reflect HMRC's expectations.
- For UK businesses with offshore procurement hubs or complex value chains, early engagement with the updates and seeking specialist support when needed will be key to managing compliance risk.
New Guidelines for Compliance (GfC): essential reading for UK businesses: imported hybrid mismatches
GfC: Help with imported hybrid mismatches (GfC16) is a must-read for UK businesses within the scope of Chapter 11 of Part 6A TIOPA 2010.
- HMRC provide clarity on compliance expectations and practical methodologies to reduce risk and avoid common errors.
This guidance is essential for:
- Tax professionals conducting compliance work for UK entities.
- UK risk leads responsible for reviewing tax returns and managing risk.
- Group tax functions with Multinational Enterprises (MNEs).
Imported hybrid mismatches are complex and often misunderstood. The new guidelines:
- Clarify key concepts such as payments, quasi-payments, reasonable to suppose, control groups and structured arrangements.
- Introduces a step-by-step methodology for identifying and analysing mismatches.
- Highlights high-risk areas, including mergers, restructures, partnership structures and permanent establishments.
- Provides best practice for disclosures on CT600B and evidencing compliance.
GfC16 guidance will help to:
- Reduce uncertainty and improve transparency.
- Support robust documentation and governance.
- Help businesses lower the risk of enquiries and penalties, as well as effectively manage enquiries that may arise.
All relevant teams should review the guidance and integrate its recommendations into their compliance processes.
- For questions or to report errors, contact HMRC through the provided email address, quoting the GfC16 as reference.
External link