SME Tax Update 22 October 2026

Hello,

With so much speculation about what might happen in next week’s Budget, HMRC’s October Agent Update contains a reminder of one significant change that is already confirmed. From 6 April 2027, most unused pension funds and pension death benefits will be brought within the value of a deceased person’s estate for Inheritance Tax (IHT) purposes. 

SME tax news 12

As the technical detail continues to emerge, our new Pensions & IHT guide explores the implications of the changes and planning considerations advisers may want to keep in mind.

On the VAT front, HMRC have published new Guidelines for Compliance (GfC) on the treatment of cryptoassets, providing welcome clarification for businesses involved in cryptoasset transactions. This is no longer an area relevant only to large digital platforms or sophisticated investors. Artists, creators and other small businesses are increasingly using cryptoassets as part of their commercial activities.

The guidance sheds light on how established VAT principles apply in a rapidly evolving area and highlights issues that many businesses may not have considered.

Trustees have also received further clarity on how the new mandatory tax adviser registration requirements apply to them. Given the penalties that can arise from non-compliance, HMRC's adjusted guidance will come as a relief to many.

Finally, the Cabinet Office annual accounts reveal that £38.5 million has been set aside to cover liabilities arising from failures to take reasonable care when making employment status determinations. The story offers an interesting perspective on the practical challenges that continue to surround the Off-Payroll Working rules.

More news, a case and updates below.

The rossmartin.co.uk tax team

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Quick News 

Agent Update 148: October 2026
HMRC have published their Agent Update for October 2026. We have summarised the key content, including details on voluntary registration for non-mandatory payrolling of Benefits in Kind, information on the changes coming to Inheritance Tax on pensions in April 2027, and useful reminders when filing Company Tax Returns.

HMRC clarify mandatory registration requirements for trustees
HMRC have clarified that individual and corporate trustees do not need to register under the mandatory tax adviser registration rules when they interact with HMRC solely in their capacity as a trustee.

VAT treatment of cryptoassets considered in latest guidance
HMRC have published Guidelines for Compliance (GfC) 21, 'Help with VAT treatment of cryptoassets'. The guidance outlines HMRC's approach to how UK VAT rules apply for businesses involved in cryptoasset transactions.

New guidance sets out penalties for digital platform operators
HMRC have published guidance outlining penalties for UK-based digital platform operators for not meeting their reporting and filing obligations. Penalties of up to £5,000 can be charged for each obligation not met.

Cabinet Office faces £38.5m IR35 bill
HMRC have concluded that the Cabinet Office failed to take reasonable care when applying the Off-Payroll Working (IR35) rules. The Cabinet Office has set aside £38.5m for unpaid Income Tax, National Insurance and interest. A penalty of up to £8.9m could follow.

One-to-many letters: Tracker
HMRC's latest one-to-many 'nudge' letter targets individuals recorded as a company's Person with Significant Control (PSC), asking them to ensure their tax returns are correct.

Tax Cases (subscription content)

No capital loss for loan converted to shares
In Timothy Bunting v HMRC [2026] EWCA Civ 1331, the Court of Appeal (CoA) agreed with the Upper Tribunal (UT) that relief for a capital loss on a loan to a trader was not available. The loan had been released in exchange for shares before the loss relief claim was made, so it was no longer ‘outstanding’.

Editor's Choice

This week's Editor's Choice was selected by Jenni Davie. You can meet our team of editors and writers here: Meet the team.

IHT Business Property Relief: Estate planning
How can you use Business Property Relief (BPR) to its maximum advantage through the interaction with other Inheritance Tax (IHT) reliefs?

IHT: Gifts with reservation
What are the Gift With Reservation (GWR) rules? When do they apply?

CGT: Share-for-share exchanges
How does tax relief for a share-for-share exchange work? What are the rules for an exchange of shares or securities? Are there anti-avoidance rules to consider? Is tax clearance needed?

Guides & Updates 

New This Week

Pensions & IHT: April 2027 changes
What are the new Inheritance Tax (IHT) rules on pensions? What effect will these rules have on an individual's IHT position? What planning can be done in preparation for the new rules?

Self-employed  

Class 4 National Insurance Contributions (NICs)
What is Class 4 National Insurance (NI)? Who has to pay it and how is it calculated? What reliefs and exemptions are available? What are the rules for losses?

Directors & Companies

EIS: Enterprise Investment Scheme
When can EIS relief be claimed? What are the conditions for EIS relief? What are the benefits of EIS relief?

Employers

Tips, gratuities and troncs
How are tips, gratuities and troncs taxed? What are the rules for National Insurance Contributions (NICs)? What impact does the Employment (Allocation of Tips) Act 2023 have?

Capital Allowances

Long-life assets
What is a long-life asset for capital allowances? What allowances can be claimed on long-life assets? How does the £100,000 monetary limit work?

Private Client & Estate Planning

Cryptoassets: How are Bitcoin, cryptocurrencies or cryptoassets taxed in the UK?
How do you tax Bitcoin? Are cryptocurrency or cryptoasset gains or profits, taxable? Can you obtain tax relief if you make losses on Bitcoin? Gains on transactions in cryptoassets are potentially taxable in the same way as other investments.

Payments On Account (POAs): Self Assessment
When are Payments On Account (POAs) made under Self Assessment? How are POAs calculated? What are the consequences of not making a payment on time? Can POAs be reduced? What happens if POAs are reduced too far? What changes to POAs have been proposed?

Land & Property

Annual Tax on Enveloped Dwellings (ATED)
What is the Annual Tax on Enveloped Dwellings (ATED)? Who does ATED apply to? What relief is available and how is it claimed? What are the ATED return filing dates?

Investigations & Enquiries

Making a tax disclosure (Digital Disclosure Service)
How do you disclose errors or mistakes in direct taxes and notify HMRC of an under-assessment? What is the process for making a disclosure? What are the deadlines?

VAT

Goods or services for VAT
What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

Annual accounting
What is the VAT annual accounting scheme? How does it work? Who can use it? What are the conditions? 

Continuing Professional Development (CPD)

Recent and upcoming webinars include: 

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Missed the Last Tax Update?

Ross Martin Tax: SME Tax Update 15 October 2026

  • Professional bodies make 2026 Budget representations
  • One-to-many letters: Tracker
  • Canned wine R&D project crushed
  • IHT: Summary of reliefs
  • Savings income: How interest is taxed
  • Badges of Trade: Are you trading or not? 
  • Incorporation: Businesses & Trades 
  • Winter Fuel Payment recovery UPDATE
  • Promoters of Tax Avoidance Schemes (POTAS) UPDATE
  • Plastic Packaging Tax UPDATE  ...More

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