In this week’s detailed miscellaneous updates which you can read more about below, HMRC has sent information about the removal of certain employment expenses and higher rate gift aid relief as a result of its annual coding process, and the Exchequer Secretary to the Treasury (XST) has made a statement to Parliament on the reform of Pillar Two. HMRC has also asked us to highlight an increase in suspicious activity concerning email scams targeting agents. In other news this week: Edition 3 of HMRC’s Ready Steady File!, the newsletter which provides the latest information on its Making Tax Digital for income tax testing programme, was published last month, The House of Commons Library has published a research briefing ‘Taxation of state pension’, The minutes from the most recent meeting of the Guidance Strategy Forum are available, The latest schedule of HMRC Talking Points live and recorded webinars for tax agents are available for booking. Spaces are limited, so take a look now and save your place, and Check HMRC’s online services availability page for details of planned downtime and the online services affected. Annual coding process HMRC has sent the below information on its annual coding process which has removed employment expenses and gift aid higher rate relief from selected taxpayers from April 2026.   Employment expenses For taxpayers that have employment expenses over £120 coded (i.e. their tax code has been increased for these), their codes have been amended from 2026/27 to remove these if they meet one of the following criteria: they have no current PAYE income, or there is an employment gap of a full tax year since the employment expense was claimed, or they have not had any self-assessment (SA) footprint since 2021/22, or the employment expenses within their code are higher than their 2022/23 SA return. If HMRC has data that indicates that the taxpayer’s circumstances have changed since they applied for relief for employment expenses, HMRC is taking action to correct that tax code. Higher rate gift aid relief For taxpayers that have higher rate gift aid relief coded, their codes have been amended to remove the relief from 2026/27 if they meet all of the following criteria:    the same amount of gift aid relief has been coded for at least three years, and  there has been no SA footprint for at least three years.  As the amount coded has not changed for at least three years, HMRC’s view is that it is highly unlikely that the taxpayer has claimed or confirmed this relief via telephone, webchat, or in writing. This is because HMRC’s research indicates that the majority of regular charitable donations do not continue beyond 12 to 18 months.   If the taxpayer believes that they remain entitled to gift aid higher rate relief and/or employment expenses from 2026/27 and that these should not have been removed from their tax code, they should contact HMRC directly to discuss.   Pillar Two reforms The XST Dan Tomlinson has made a statement to Parliament which welcomes the package of reforms to Pillar Two which was approved recently by the OECD/G20 Inclusive Framework on BEPS. In the statement the XST said that these bring “certainty and stability” for UK businesses. The statement also confirms that measures to amend the UK’s Pillar Two will be subject to technical consultation and will then be brought forward in the next Finance Bill. Any changes will apply for accounting periods beginning on or after 1 January 2026. Email scams targeting agents HMRC has asked us to highlight a current email scam which specifically targets tax agents. The email claims to be from HMRC and asks the recipient to update their anti-money laundering supervision registration details. HMRC’s advice is to always protect yourself from scams by accessing HMRC’s online services for tax agents directly on GOV.UK. If you receive an unexpected phone call, text, or email claiming to be from HMRC, don’t let yourself be rushed. Before sharing any personal information, take a moment to check GOV.UK to see if the contact is genuine. HMRC will only ever email you from an email address that ends in gov.uk such as in the following examples: @hmrc.gov.uk, @tax.service.gov.uk, @advice.hmrc.gov.uk, and @updates.hmrc.gov.uk. Gov.uk will only feature at the end of an email address, and never in the middle. If you’ve received a suspicious email, text, or phone call please report it to HMRC by: forwarding text messages to 60599, forwarding emails to phishing@hmrc.gov.uk, or visiting GOV.UK to report a phone call.

Making Tax Digital (MTD) for income tax commences in just over two months’ time from 6 April 2026 for sole traders and landlords with gross ‘qualifying income’ (combined income from trading and property before any deductible expenses) above £50,000. Are you ready for this change in UK tax administration? If not, now is the time to prepare. To assist you in your preparations, the Institute recently launched its MTD hub, a one stop shop of resources developed by the Institute to assist members and taxpayers in their preparations. The hub also contains the latest news and links to HMRC resources and guidance. You can also watch our video on the MTD hub here. Yesterday HMRC wrote to the Institute reiterating the importance of taking steps to prepare now ahead of the first tranche of mandation. It also asked us to share links to some important HMRC resources: MTD agent step by step guide, Register for specialist MTD support – these sessions provide agents with direct access to HMRC specialists that can provide tailored MTD readiness agent support, HMRC communications resources – these resources can be used to align your practice’s MTD messaging with what clients may see from HMRC and also provide ready-made products you can use to educate clients, and Sign up for a HMRC MTD webinar – these webinars cover planning steps, actions to take now, how to sign-up clients for April 2026 and answers to questions. The first webinar is scheduled for Wednesday 11 February 2026. Are you looking for the top tips on how to get ready? Check out HMRC’s new MTD agent toolkit. This aims to provide a practical aid to help guide agents through this journey in a logical order so that agents can be confident that they and their clients will be ready ahead of April 2026. The new toolkit includes help with understanding the changes, planning (including “segmenting clients”), preparing the practice (including the “service offer”), preparing clients (including a conversation checklist tool) and helpful resources including videos and webinars. Alongside this, the agent-specific content on HMRC’s MTD campaign page is also being updated to provide agents with a dedicated resource which will provide a clearer more streamlined journey and direct access to tailored guidance and resources. HMRC has also recently updated its guidance on the various MTD for income tax exemptions which are available as follows: Find out if you can get an exemption from Making Tax Digital for Income Tax – this page now contains the full list of exemptions from MTD for income tax, and Apply for an exemption from Making Tax Digital for Income Tax which explains the exemption applications process if a taxpayer is not automatically exempt. HMRC is keen to stress that as with all its MTD guidance, guidance will continue to be iterated ahead of April 2026 to ensure that policy and legislation are clearly reflected. As a result, we recommend that members bookmark these pages and regularly check for the latest updates which will also be covered in Chartered Accountants Tax news and on our MTD hub. For any taxpayers currently participating in MTD testing, HMRC is highlighting an issue with how payments on account (POAs) for 2025/26 and 2024/25 balancing payments of income tax and Class 4 NIC for self-assessment (SA) are treated. As the information for these taxpayers is split between different HMRC systems, any 2024/25 balancing SA payment remains within HMRC’s non-MTD system, whilst 2025/26 SA POAs are within the new MTD system. Because of this, some taxpayer statements show SA POAs as “transferred to digital” or “nil” and therefore do not show the full picture of any payments which were due on 31 January 2026. Taxpayers should access both the MTD service and the legacy SA service from within their Personal Tax Account (PTA) or Business Tax Account (BTA) to see the total balance which fell due. To address this, HMRC issued a letter explaining this issue to those affected which explained where to find their SA POAs information and how to work out what they still needed to pay. The letter also explained that POAs marked as “transferred to digital” were still due for payment by 31 January and what needed to be done if these did not appear in their MTD account. This is particularly important as interest will be charged on any amounts not paid by the 31 January 2026 due date. A message was also placed in the taxpayer’s MTD account advising them to check their SA online account. Agents should also ensure that they check both systems before advising clients. HMRC advises that work is already underway on longer term solutions for this issue for the future.

With just under four months to go to the commencement of Making Tax Digital (MTD) for income tax from 6 April 2026, the Institute is pleased to present our new MTD hub. The aim of the hub is to assist members and businesses in their preparations for this key change in UK tax administration. Read the latest news and guidance on this key change in addition to more detailed information on what MTD for income tax is, the timetable for mandation, exemptions, deferrals, how to sign up and much more. The Institute will continue to develop the hub in the coming weeks and months as policy changes are announced and as HMRC publishes tools and information to assist agents, businesses and landlords in their preparations.