HMRC have published their Agent Update for August 2026. We have summarised the key content, including what to do if a business missed the first quarterly update deadline for Making Tax Digital (MTD), changes to the process for obtaining an Inheritance Tax (IHT) reference number, and details of the final window for agents to register for Multi-Factor Authentication (MFA).
Making Tax Digital for Income Tax
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:
- Sign up your client for MTD for Income Tax.
- Authorise your software, connect it to HMRC and check it is set up for the appropriate accounting period.
- Use your MTD compatible software to create digital records of your client’s income and expenses from self-employment and property.
- Send your client’s first quarterly update to HMRC.
Exemptions
- 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.
See MTD: Toolkit for accountants and Compare software for Making Tax Digital for Income Tax
Multi-Factor Authentication (MFA) update: final activation approaches
Check when MFA will be activated:
- If you did not submit a request for early activation, your accounts will be activated at some point during the final activation window, running from 28 September 2026 to 15 October 2026. HMRC cannot provide a specific activation date within this window.
Prepare for MFA:
- HMRC strongly encourages 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 and choosing the one that best suits your way of working.
- Selecting your preferred future settings and checking for any existing MFA settings that need updating.
- Reviewing administrator roles on your account to ensure the right people have the right access.
See HMRC's Multi-Factor Authentication for agents and MFA voluntary registration phase now ended
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).
- 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.
See Mandatory tax adviser registration with HMRC
Corporation Tax late filing penalties: automatic notices resume
HMRC temporarily paused issuing automatic notices for late filing penalties for Corporation Tax to allow for a system update following the increase to penalties from 1 April 2026. This was to prevent companies from receiving penalty notices showing incorrect amounts. The system updates are 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.
- 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.
- Companies remain liable for penalties if they file late, even if a notice was not issued during the temporary pause.
- Companies do not need to contact HMRC if they were expecting a notice that was delayed; notices are now being issued automatically.
See Adviser's Tax Penalty Planner
Changes to the process for applying for an Inheritance Tax (IHT) reference number
- If you need an IHT reference number, you should now use the Online service to apply using form IHT422.
- This requires an email address.
- Paper applications using IHT422 will continue to be accepted where needed.
Borderline excepted estates: supporting agents to get IHT reporting right
HMRC have noticed common misunderstandings concerning eligibility and reporting for the various Nil-Rate Band (NRB) allowances.
- As a preventative and educational exercise only, they are issuing a One-to-Many letter to agents who have submitted excepted estate grant applications with estate values at or around the various NRB thresholds.
- Agents are advised not to take the Residence Nil Rate Band (RNRB) and any brought-forward (transferable) allowance into account when considering if the estate is an excepted estate.
- Also, the downsizing allowance or transferable allowance do not apply automatically and need to be claimed in an IHT400.
- If an IHT400 is not sent when it should be, incorrect calculations or out-of-time claims may lead to unexpected tax and penalties.
- Where there is uncertainty about eligibility or values, submitting an IHT400 account may be the most appropriate route.
See IHT: Residence Nil-Rate Band (RNRB), IHT: Transferable Nil-Rate Band and IHT: Estate planning checklist
Phased roll-out for mandatory payrolling Benefits In Kind (BIKs): actions for agents to take now
HMRC are encouraging agents to ensure their employer clients are prepared for reporting BIKs in real time.
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.
- Most other benefits will be included from April 2028.
Supporting your employer clients to communicate with their employees:
- Agents can support employers to explain how, from April 2027, employees:
- Who currently pay tax in arrears on BIKs will pay tax in real time for BIKs included in payrolling for phase 1.
- Will no longer have a deduction in their tax code to deal with tax on an estimated benefit.
- Will not pay tax twice where they are paying back an underpayment of tax on a benefit provided in a previous year.
- Employers should be advised to talk to their employees before the changes come in and advise them to contact HMRC if they experience financial hardship due to the overlapping tax charges that may occur in the transitional period.
In preparation for phase 1, agents are advised to inform their employer clients that they should, before April 2027:
- 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.
- 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.
Voluntary payrolling:
- From November 2026, employers can register for voluntary payrolling for all other BIKs that are not mandated to be payrolled from April 2027. This includes loans and accommodation.
See Payrolling or benefits and Mandatory payrolling of benefits from 2027: Briefing
Issuing of P800s
HMRC have commenced their annual check of PAYE records to confirm whether taxpayers have paid the correct amount of tax:
- HMRC will refund overpaid tax. They have prioritised overpayment letters, sending them out first.
- Taxpayers 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 tax has been underpaid, the outstanding amount is usually collected automatically through PAYE, with no action required from the taxpayer.
Around 45 million accounts will be reviewed, with P800 letters being issued through to November.
- HMRC are advising that agents may see an increase in client queries until then and should remind clients to read their P800 carefully, check the figures against their own records, and follow the instructions in the letter.
- HMRC have issued a reminder that they will never ask taxpayers to claim a refund by replying to a text message or email.
See Collecting tax debts via PAYE
Guidelines for Compliance GfC19: help with Short-Term Business Visitors (STBVs)
HMRC have recently published new Guidelines for Compliance (GfC) for Help with STBVs. The guidelines are primarily for UK employers with overseas employees working in the UK on a short-term basis and they:
- Explain the Income Tax, National Insurance contributions and PAYE treatment for STBVs.
- Highlight common errors and areas of risk identified by HMRC and explain what to do if a mistake is made.
- Help taxpayers get their tax right first time.
- Advise what records and evidence should be retained.
See Globally mobile employees: Short-Term Business Visitors
Guidelines for Compliance GfC8: temporary reduced rate of VAT for children’s meals, tickets and family attractions
HMRC have 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 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 provides practical support which includes what to consider when returning to the standard rate of VAT after the temporary relief ends.
See Client communication: VAT reduction for children's meals, tickets and family attractions
Consultation on the tax treatment of predevelopment costs
The government is consulting on the tax treatment of predevelopment costs, which are costs 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 closes at midnight on 21 September 2026.
See Consultation on Tax treatment of predevelopment costs
Child Benefit information now pre-populated in Self Assessment tax returns
HMRC have introduced the pre-population of Child Benefit information in online Self Assessment returns, using existing information they already hold.
- Where pre-populated figures are displayed, taxpayers can amend them if they believe they are incorrect but must provide an explanation for any changes.
- If HMRC does not hold all the relevant payment information, the Child Benefit section will need to be completed manually.
See High-Income Child Benefit Tax Charge
Agent engagement
Help improve GOV.UK guidance:
HMRC are looking for agents who support taxpayers to claim a tax refund through Self Assessment to help improve GOV.UK guidance.
- If you would like to be involved, contact HMRC by email at
This email address is being protected from spambots. You need JavaScript enabled to view it. with your name, email address and job title. - You may be invited to a research session online using Microsoft Teams. Any information you share will be anonymised, confidential and used for research purposes only. HMRC offer a voucher to thank you for taking part.
Upcoming research on experiences of tax debt and engagement with HMRC:
HMRC would like to hear from tax agents who support clients with tax debt and financial difficulties.
- HMRC researchers will conduct online interviews with agents to learn more about the barriers to engagement, decision-making and the support people may need when dealing with tax debt.
- If you volunteer to take part, you will be invited to a 60-minute interview on Microsoft Teams. Any information you provide will be treated in confidence and used for research purposes only.
- To participate in the research, complete the online registration form Experiences of tax debt and engagement with HMRC.
Providing feedback on HMRC manuals
HMRC have asked agents to suggest or report issues they spot in HMRC manuals. The primary purpose of the manuals is to explain HMRC's interpretation of the relevant legislation; however, feedback from agents is essential.
- Feedback routes are on all pages on Gov.uk.
- Or use the contact Gov.uk form.
HMRC note that within the last 12 months they received 1,498 feedback comments, with 62% leading to guidance improvements but the volume is still low compared to the overall usage.
- HMRC are asking for help to improve the content by providing feedback, even if it is to indicate that a page is useful.
Updates to Double Taxation individual and company form guidance for UK REITs
HMRC has updated several Double Taxation forms and guidance relating to UK Real Estate Investment Trusts (REITs).
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.
Borders and trade
Customs Modernisation call for evidence:
- In June 2026, HMRC launched a Call for evidence on Customs Modernisation. It seeks views on how international trade is evolving and what this means for customs processes in the UK, and aims to identify where the current system works well, how it supports modern trade and what further improvements can be made.
- The call for evidence closes at midnight on 15 September 2026. Taxpayers with questions should contact the customs modernisation team by email:
This email address is being protected from spambots. You need JavaScript enabled to view it. .
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 a comparable carbon price to that paid by UK manufacturers.
- HMRC have published New guidance to enable businesses to check whether their goods are in scope, understand their record-keeping obligations and check whether they may need to register.
- To stay up to date, taxpayers should register with the CBAM mailing list by emailing:
This email address is being protected from spambots. You need JavaScript enabled to view it. .
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