HMRC have published their Agent Update for August 2025. We have summarised the key content with links to our detailed guidance on the topics covered, including advice on preparing your agent services account for Making Tax Digital (MTD) for Income Tax.
Finance Bill 2025-26: draft legislation and tax documents
On 21 July 2025, the Government published draft legislation for the Finance Bill 2025-26, outlining a package aimed at closing the tax gap and modernising tax administration.
The main measures of interest to agents include:
- Closing in on promoters of marketed tax avoidance.
- Modernising and mandating tax adviser registration. See Mandatory tax adviser registration with HMRC.
- Enhancing HMRC's powers to deal with tax advisers who facilitate non-compliance.
- Tackling tax non-compliance in the umbrella company market.
- Better use of new and improved third-party data.
- Making Tax Digital for Income Tax and penalty reform.
See Legislation Day 2025 (subscribers)
Getting your agent services account ready for Making Tax Digital (MTD) for Income Tax
If you have clients who are sole traders or landlords with gross income (before expenses and tax are deducted) from self-employment, property or both, they will be legally required to use MTD for Income Tax from:
- 6 April 2026, where the qualifying income is more than £50,000 in the 2024-25 tax year.
- 6 April 2027, where the qualifying income is more than £30,000 in the 2025-26 tax year.
- 6 April 2028, where the qualifying income is more than £20,000 in the 2026-27 tax year.
Qualifying income is the gross income, before expenses and tax are deducted, that sole traders and landlords receive in a tax year from self-employment and property combined.
Agents can get ready for MTD by following the MTD agent step-by-step guide and HMRC's agent toolkit.
- We have also published an article to assist agents with the implementation of MTD for Income Tax. See MTD: Toolkit for accountants.
- To sign up your clients for MTD, you will need an Agent Services Account (ASA).
- If you do not currently have an ASA, you can Create one here.
- You must have authorisation to act for your client in your ASA before you can sign them up.
- You can add your existing Self Assessment authorisations in bulk to your ASA by transferring them from your HMRC online services for agents account (see below).
- This will not remove any access from your current Self Assessment for agents' service.
To add your existing client authorisations to your ASA:
- Compile details of all the Government Gateway credentials you use for filing your clients' Self Assessment returns.
- Head to the client authorisation section of your ASA homepage and select 'add existing Self Assessment authorisations to this account. Follow the instructions.
- Repeat this process for each Self Assessment code you use.
HMRC encourages agents to Sign up early to make sure you and your clients are ready.
- Registering for testing will give you and your clients exclusive access to HMRC's dedicated MTD support team.
- They can help you and your registered clients with any questions about the service and other Income Tax queries.
- If you have clients who must join MTD in April 2026 but do not want to join testing, you can Sign them up now for an April 2026 start.
HMRC wins landmark Upper Tribunal (UT) case against mini-umbrella company fraud
Mini-umbrella company fraud is a type of fraud within the temporary labour market.
- From April 2026, recruitment agencies will be responsible for ensuring the correct tax is paid on workers' income.
- Where no agency is involved, the end client will be liable.
On 17 July 2025, the UT ruled that the mini-umbrella company model used in the case was fraudulent.
- This confirms HMRC's ability to deregister these companies from VAT.
- The UT confirmed that these mini-umbrella companies fraudulently exploit the VAT Flat Rate Scheme.
- Mini-umbrella companies also exploit the Employment Allowance.
- The UT decision will help create fair competition for legitimate businesses.
- It also protects workers who unwittingly become victims of these fraudulent schemes.
Read our full summary of the case: HMRC able to force VAT deregistration
Spotlight 71: warning for agency workers and contractors who are moved between umbrella companies
HMRC has issued Spotlight 71 to help those working through umbrella companies to spot the signs of tax avoidance, particularly those who are unknowingly moved between umbrella companies.
Spotlight 71 provides information on some of the signs of tax avoidance and where you and your clients should look to identify them.
- It also provides examples of what you and your clients might be told by those operating tax avoidance schemes when contacting them about potential avoidance.
If you think you or one of your clients is already involved in this type of arrangement and want to get out, you can Contact HMRC.
- You can report tax fraud and tax avoidance arrangements, schemes, and the person offering them using HMRC's online form to report tax fraud.
See Spotlight 71 warns agency workers about umbrella companies
HMRC introduces Time to Pay for Simple Assessment debts
Self-Serve Time to Pay has now been introduced to support taxpayers with Simple Assessment debts.
- The arrangements offer taxpayers the opportunity to set up a payment plan to pay off their debt by instalments if they have been unable to pay off the tax due by the payment deadline.
While some taxpayers may receive a Simple Assessment year-on-year, most will have no prior knowledge of what a Simple Assessment is, how it's calculated or why they have underpaid tax.
- You may therefore start to receive queries from clients who receive one of these letters.
The Simple Assessment letter includes information about:
- How much tax is owed.
- When it needs to be paid.
- How to pay it, including what to do if they disagree with the assessment.
There are various ways for customers to pay, including the HMRC app.
A common reason for a Simple Assessment is to pay tax on their State Pension.
- Taxpayers can use HMRC's interactive tool to check if they need to pay tax on their pension to see if this is likely to apply to them.
Taxpayers who owe tax from Bank, Building Society interest or both may receive two Simple Assessment letters in the same tax year.
- The second letter will include the total tax figure owed for the year, including the amount that was set out in the first letter, even if the taxpayer has paid that to HMRC.
- If the taxpayer has already paid the first amount, they will owe the amount set out in the second letter minus what they have already paid.
If a taxpayer receives a Simple Assessment, but they have already registered for Self Assessment or filed their tax return for the year to which the assessment relates, they or their agent can call HMRC on 0300 200 3300 to have their Simple Assessment withdrawn.
File early to make Self Assessment easier: tools to help you get ahead
Over one million tax returns have already been submitted by agents. There are benefits in filing early. It is worthwhile to sign up for the services that are designed to support agents:
- Agents' online service for Self Assessment: submit returns, view statements and manage your clients' accounts.
- Income Record Viewer (IRV): prepare accurate tax returns using your client's information, which includes their pay, pension, employment history and tax codes, helping you file with confidence.
- Tax agents' handbook: a go-to resource for manuals, forms and help sheets and guidance to support your work.
Capital Gains Tax (CGT) adjustment 2024-25 reminder
For the 2024-25 tax year, HMRC's tax return will not automatically calculate at the new CGT rates.
- Taxpayers and agents will need to take additional steps to ensure the correct tax is accounted for.
Any extra CGT due must be declared in the relevant adjustment boxes, which are:
- Box 51 of the Capital Gains Summary page (SA108).
- Boxes 5.8B, 5.17B or 5.37A of the Trust and Estates Capital Gains (SA905).
- Box 6.7A Tax Return for Trustees of Registered Pension Schemes (SA970).
See CGT: How to calculate a capital gain or loss
Preparing businesses for the Vaping Products Duty (VPD) and Vaping Duty Stamps (VDS) scheme
The government is introducing a VPD at a flat rate of £2.20 per 10ml of vaping liquid, alongside a VDS scheme requiring stamps to be affixed to vaping products.
- These come into force on 1 October 2026.
- From 1 April 2026, businesses that manufacture, import or store vaping products in the UK must apply for approval for the VPD and VDS scheme, ahead of them coming into force.
HMRC's guidance covers:
- Who is affected by these duties.
- What vaping products are covered.
- Applying for approval.
- Record-keeping.
- Next steps and contact information.
See HMRC's guidance on Preparing for Vaping Products Duty and the Vaping Duty Stamps Scheme
Alcohol Duty Reforms
All approved producers must pay Alcohol Duty by the 25th day of the month.
- From 1 September 2025, late payment interest will apply to overdue Alcohol Duty.
- If a producer pays late, they will be asked to pay late payment interest on the amount outstanding from the first day the payment is overdue to the day it is paid in full.
- Currently, late payment interest will be calculated at the Bank of England base rate plus 4%.
HMRC also intends to introduce repayment interest from 1 September 2025.
- This means HMRC can pay repayment interest to businesses in certain circumstances.
- These include where Alcohol Duty has been paid due to an error by the Commissioners or where the Commissioners have delayed a repayment of Alcohol Duty that is due.
- It also applies where a tribunal finds that under an assessment to Alcohol Duty, a producer has overpaid or it was not due.
These provisions aim to strengthen confidence in the tax system by providing certainty and consistency to producers.
- Late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time.
- Repayment interest compensates taxpayers fairly when they overpay.
VAT registration: Effective Date of Registration (EDR) amendment request changes
A request to amend the date a business registers for VAT voluntarily does not carry a right of Appeal or review.
- A business chooses the date it becomes VAT registered when doing so voluntarily.
- If a mistake is made when choosing this date and it affects the business's pre-registration cost calculations, this cannot be changed later.
- Taxpayers must fully consider their choice of registration date before making it.
- HMRC may accept a request to retrospectively amend an EDR in exceptional circumstances.
- Taxpayers would still have the option of challenging HMRC through Judicial Review should they feel HMRC's decision is unfair or unreasonable.
HMRC's guidance and the VAT registration manual have been updated to better support taxpayers in having their EDR correct at the point of registration and the circumstances in which they can request an amendment if needed.
- HMRC have a Digital tool designed to help businesses understand VAT registration and estimate what registering for VAT may mean for them.
See Is voluntary VAT registration worthwhile?
Research and Development tax reliefs
Finance Act 2025 made changes to the enhanced relief for loss-making Research and Development (R&D), Intensive SME (small or medium-sized) companies.
- Enhanced Research and Development Intensive Relief (ERIS) is a Corporation Tax relief that can be claimed by these companies.
- The changes apply to companies that have a registered office in Northern Ireland.
- They took effect for claims to ERIS made on or after 30 October 2024.
- For these companies, the additional benefit provided by ERIS, over and above the benefit of a claim under R&D Expenditure Credit (RDEC), is state aid.
- Claimants must comply with limits on the amount of state aid received in a three-year period.
- HMRC must issue them with a state aid notification, which they must keep as part of their business records.
- All companies claiming ERIS or RDEC must supply HMRC with information about the claim using an online form.
See R&D: SME Tax Credit scheme
Changes to Overseas Workday Relief (OWR)
From 6 April 2026, the previous rules for non-domiciled status ended and have been replaced by a system based on tax residence.
- Subject to transitional arrangements, employees eligible for foreign income and gains relief will also be eligible for relief on relevant employment income which relates to duties performed outside the UK.
HMRC are running a live webinar on 16 September 2025, which will help you understand the main changes you need to be aware of, including:
- How OWR has changed.
- New financial limits.
- The transitional arrangements.
- Employee record-keeping requirements.
You can register for the live webinar Here.
See Overseas Workday Relief (OWR)
External links