The Tax Round: Autumn Edition 2026

In this autumn edition of the Tax Round, we bring together the latest tax news, legislative changes and regulatory developments affecting businesses and individuals across the UK.

This edition explores a range of topical tax and business developments, including HMRC’s automatic sign-up of eligible taxpayers for Making Tax Digital for Income Tax, forthcoming pension inheritance tax changes and the phased introduction of mandatory payrolling of benefits. We also consider proposed changes to treaty relief for withholding tax on overseas interest and the latest rules affecting company reconstructions and share exchanges.

For businesses involved in R&D, we examine changes to RDEC quarterly instalment payments and HMRC’s Targeted Advance Assurance service, alongside other key developments affecting individuals, employers and businesses.

With the Autumn Budget taking place on 28 October, further tax changes and announcements may follow. We will provide an update on the key measures and what they could mean for you in our Autumn Budget summary following the Chancellor’s announcement.

The Autumn edition includes:

• HMRC automatic MTD sign-up from September 2026
• Pension inheritance tax changes 2027 | Rayner Essex
• HMRC mandatory payrolling update: phased introduction confirmed
• HMRC consultation on simplifying treaty relief on withholding tax on overseas interest
• R&D expenditure credits and QIPs: what changes from April 2027?
• R&D Targeted Advance Assurance: What You Need to Know
• HMRC share exchange clearance for company reconstructions

We hope you find this autumn edition of the Tax Round useful and informative. If you have any questions about the topics covered or would like to discuss how any of these developments may affect you or your business, please contact Mark Moore, or James Hadley.  Our team look forward to hearing from you and will be happy to help.

Happy reading!

HMRC automatic MTD sign-up from September 2026

HMRC will begin automatically signing up eligible sole traders and landlords for Making Tax Digital for Income Tax, from September 2026. The move affects taxpayers who should already use Making Tax Digital (MTD) for Income Tax for 2026/27, but have not yet registered. HMRC will carry out the process in stages over the coming months.

Automatic registration does not fulfil your reporting obligations. If HMRC signs you up, you must still maintain digital records and submit updates through compatible software.

The September initiative targets sole traders and landlords whose combined qualifying income exceeded £50,000 in the 2024/25 tax year and who must use MTD from April 2026. Exemptions can apply. Qualifying income means gross income from self-employment and property before expenses, rather than taxable profit.

Pension inheritance tax changes 2027

Pension inheritance tax changes confirmed under the Finance Act 2026 are expected to reshape retirement, estate and succession planning for thousands of individuals and families across the UK. 

From 6 April 2027, most unused defined contribution pension funds and pension death benefits will form part of a deceased person’s estate for inheritance tax purposes. The government reforms represent a significant shift in how pension wealth is treated for inheritance tax purposes and are likely to prompt many individuals to revisit existing retirement and succession planning strategies.  

HMRC mandatory payrolling update: phased introduction confirmed

On the 17th June 2026, HMRC updated the guidance on mandatory payrolling of taxable benefits and expenses, announcing a phased introduction of mandatory payrolling from April 2027.

HMRC will introduce the changes in two phases. From April 2027, employers must report the following benefits through FPS and calculate and pay tax and Class 1A National Insurance through PAYE:

HMRC consultation on simplifying treaty relief on withholding tax on overseas interest

HMRC recently consulted on simplifying the process for obtaining treaty relief from UK withholding tax on interest paid to overseas lenders. The consultation ran from 13 July to 7 September 2026 and considered several possible reforms, including allowing UK payers to apply treaty relief without obtaining prior HMRC approval.

HMRC has not yet confirmed any changes and will consider the consultation responses before deciding whether and how to reform the current system.

UK businesses paying interest to overseas lenders may need to deduct UK withholding tax at the basic rate of 20%, unless an exemption or a reduced rate under a Double Taxation Agreement applies.

R&D expenditure credits and QIPs: what changes from April 2027?

Companies claiming Research and Development Expenditure Credit (RDEC) could benefit from a change to the Corporation Tax Quarterly Instalment Payment (QIP) rules from April 2027.

Announced as part of the Government’s Tax update 2026: simplification, modernisation and fairness, the measure will exclude RDEC, Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC) from augmented profits when determining whether a company falls within the QIP regime.

The change is relatively targeted, but it could have an important cashflow benefit. A company should no longer enter QIPs solely because these above-the-line expenditure credits push its augmented profits above the relevant threshold.

HMRC R&D targeted advance assurance: what you need to know

HMRC has introduced a new R&D targeted advance assurance service as a pilot, giving eligible small and medium-sized enterprises (SMEs) greater clarity on specific complex or high-risk areas before they submit an R&D tax relief claim.

The pilot launched on 18 May 2026 and will run for 12 months until May 2027. It follows HMRC’s consultation on R&D tax relief advance clearance reform, which considered how a more accessible advance clearance system could provide greater certainty for businesses while helping to reduce error and fraud within R&D tax relief claims.

HMRC has confirmed that companies can make up to two applications for targeted advance assurance. Each application can only cover one project and one area of R&D relief. A company will therefore need to submit a separate application if it wants assurance on another project or area.

Importantly, unlike the full claim advance assurance service, companies that have previously claimed R&D tax relief may still be eligible to use targeted advance assurance.

HMRC share exchange clearance: changes to company reconstructions and share exchanges

Businesses planning a company reconstruction or share-for-share exchange often seek HMRC clearance to provide certainty before implementing a transaction. However, the rules governing HMRC’s clearance process changed for transactions taking place on or after 26 November 2025.

The revised legislation changes how HMRC assesses share exchange clearance applications. Rather than focusing primarily on the commercial purpose of the transaction as a whole, HMRC can now examine whether individual arrangements have a main purpose of reducing or avoiding Capital Gains Tax. This places greater emphasis on carefully prepared clearance applications and the tax position of each shareholder.

Although the changes are technical, they have important practical implications for businesses planning a company reconstruction or share exchange. Clearance applications now need to demonstrate not only the commercial purpose of the  transaction, but also why the proposed arrangements should not fall within HMRC’s revised anti-avoidance rules.

Key Dates 2025/2026