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:
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:
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