October 2026

Technical and Client Update

In this issue

Cryptoassets: why investors must declare income and gains to HMRC

MTD for Income Tax: the story continues in 2027

Additional Self Assessment disclosures for directors in 2025/26

Businesses worry legislative tax burden is increasing

Mileage allowances changed for tax year 2026-27

Cryptoassets: why investors must declare income and gains to HMRC

Cryptoassets have moved into the financial mainstream, with many individuals now holding Bitcoin, Ethereum and other digital assets alongside traditional investments. However, a common misconception is that crypto transactions are anonymous or outside the scope of UK taxation. They are not.

HMRC expects taxpayers to declare taxable crypto income and gains, and failure to do so can lead to interest, penalties and, in serious cases, investigations. HMRC have published extensive guidance on the taxation of cryptoassets and receives increasing amounts of information from exchanges and other sources. Starting from the 2026 calendar year, HMRC will receive tax-relevant information on UK-based individuals who have used UK cryptoasset service providers.

HOW CRYPTO IS TAXED IN THE UK

The UK does not have a separate crypto tax regime. Instead, existing tax rules are applied depending on the nature of the transaction.

For most private investors, profits are taxed under the Capital Gains Tax (CGT) rules. A taxable disposal can occur when you:

  • Sell crypto for cash.
  • Exchange one cryptoasset for another.
  • Use crypto to buy goods or services.
  • Gift crypto to someone other than a spouse or civil partner.

Many people are surprised to learn that swapping Bitcoin for Ethereum is a taxable event, even if no cash is received.

Some crypto receipts may instead be subject to Income Tax – for example, rewards from mining and staking. For most, this will be taxed as miscellaneous, not trading income.

WHY DISCLOSURE MATTERS

Crypto transactions often generate a large number of taxable events, making record-keeping essential. Investors should retain details of purchases, disposals, transfers, fees and wallet addresses.

Importantly, moving crypto between wallets that you beneficially own is generally not a disposal for tax purposes. However, most other transactions may have tax consequences.

With HMRC increasing its focus on crypto compliance, you should review your holdings regularly and ensure that all taxable income and gains are reported correctly on your tax returns. Seeking advice early can help avoid costly mistakes and provide peace of mind that your crypto tax affairs are fully compliant. Where an error in a return is discovered, a voluntary disclosure will often produce a better outcome than waiting for HMRC to make contact, so do contact us if you have any concerns.

MTD for Income Tax: the story continues in 2027

Certain landlords and self-employed individuals should start preparing now for the next phase of Making Tax Digital (MTD) for Income Tax. Taxpayers with qualifying income above £30,000 in the 2025/26 tax year will be required to join MTD from 6 April 2027. Qualifying income includes gross income from property lettings and self-employment before expenses are deducted.

MTD represents the biggest change to the Self Assessment system for many years. Instead of keeping paper records and submitting information annually, affected taxpayers will need to maintain digital records using compatible software and send quarterly updates of their income and expenses to HMRC. At the end of the tax year, a final digital submission will be required to confirm their tax position.

Landlords and traders with income above the threshold should review their bookkeeping processes now and speak to us about suitable software. Early preparation will make the transition much smoother and help avoid compliance issues when MTD becomes mandatory in April 2027.

Additional Self Assessment disclosures for directors in 2025/26

Additional reporting requirements for directors of close companies came into force for Self Assessment returns from 2025/26 onwards. A close company is generally a company that is controlled by five or fewer shareholders or by its directors. The new requirements mean directors of close companies must report the following on their tax return:

  • The name of the close company.
  • The registered number of the close company.
  • The amount of income they receive from dividends from that company in that tax year.
  • The highest percentage of their shareholding.

The Self Assessment return already included boxes to indicate whether a taxpayer was a director of a close company, but completing these boxes was optional. The new rules mean directors of close companies are now obligated to complete the boxes.

Only directors who currently need to complete a Self Assessment return need to report close company information.

If the company is only a close company for part of the tax year, the new boxes must still be completed.

HMRC have recently confirmed the following:

  • Where directors are unpaid and/or have zero shareholdings in the close company, they must still complete the new boxes on the tax return. Listing unpaid directorships in the additional information box is not an acceptable option.
  • Directors of dormant close companies must also complete the new boxes.
  • Directors of registered charities or Community Interest Companies do not need to complete the new boxes where they did not receive, or become entitled to receive, any employment income or dividend income.

A £60 penalty may apply for the incorrect completion of the close company boxes. It is therefore important that you advise us of any directorships that you held in a tax year.

Businesses worry legislative tax burden is increasing

The annual report from the Administrative Burdens Advisory Board (ABAB) shows a slight improvement in HMRC’s performance but there is a rising concern over legislative burden and continued difficulties with communication channels.

The 'Tell ABAB report 2025 to 2026' represents the views of the small business community and provides detailed research to HMRC on their policies and procedures.

Legislative burden and impact

One highlight of the report was the growing concern that complying with the tax rules was becoming increasingly unwieldy. A significant 61.6% of respondents said the legislative burden had worsened over the last 12 months, with 62.8% saying they had been impacted by legislative changes.

MTD

There was a more positive perception of Making Tax Digital (MTD) for Income Tax than last year, although only slightly. Respondents said that MTD was expected to have less impact on cost and time than reported in 2025, with approximately 43% saying it would have no significant effects compared with 27% in 2025.

In spite of this, 27.2% still expected to incur significant costs. The vast majority of respondents (60.1%) felt that there are no benefits to MTD for Income Tax, a view broadly in line with the opinions reported in 2025 (65.2%).

It is worth noting that the survey was carried out before the first filing deadline for those mandated to use MTD for Income Tax from April 2026.

HMRC communications and guidance

For the last few years, HMRC have received poor scores on their communications. This year, satisfaction levels for telephone and webchat services have gradually increased, but they still receive a mixed feedback.

Across all services, except for the HMRC app, the largest group of respondents continued to rate usefulness as ‘poor’. Fifty-five per cent regarded the telephone service as poor, along with 46% for the webchat service.

The largest group of respondents for the HMRC App service rated it as ‘average’.

Regarding HMRC’s guidance documents, 31.3% felt that it was helpful, with only 14.4% considering it unhelpful.

Most startling were the responses from those who had started a business in the last 12 months. An overwhelming 72% of those respondents said the guidance did not help them complete their task (an increase from 56.6% in 2025).

Customer experience

The majority of respondents said their experience with HMRC over the last 12 months had not changed. Only 6.0% remarked that their customer experience had improved, while a substantial 31.4% said it had worsened.

Taxpayers continued to find helpline responses not up to scratch, with 47.2% saying that response times were poor, although this improved by 8.3% from 2025.

Only 3.9% of respondents rated the response times as very good.

AI use

The ABAB found that the use of generative AI for tax queries continued to rise. 32.4% reported having used systems such as ChatGPT or CoPilot to seek an answer to a tax query, up from 10.9% in 2025.

Worryingly, 61.1% felt they received an answer which resolved their query, although 7.2% of those then reported that the answer was, in fact, not reliable.

The survey had a record 10,195 responses, up from 3,146 last year. 88% of responses came from businesses and 12% from agents.

If you have issues communicating with HMRC or need help with their guidelines, please contact us; we're here to help.

Mileage allowances changed for tax year 2026-27

Rates have increased

HMRC have reminded businesses that the Approved Mileage Allowance Payments (MAPs) have been updated for the 2026-27 tax year. Rates have:

  • Increased to 55p per mile for the first 10,000 miles.
  • Remained at 25p per mile after 10,000 miles.

These changes are backdated to 6 April 2026.

If you reimburse your employees at or below the approved MAP rate, you may want to increase the amount you reimburse your employees for business mileage, in line with the new approved MAP rates.

Reimbursement?

If you paid your employees mileage payments or RME above the old rates, Income Tax and/or Class 1 National Insurance contributions may have been deducted, which may no longer be due.

You may need to correct payroll for previous months in 2026-27, so that overpaid tax and both employers' and employees’ Class 1 National Insurance contributions can be refunded.

If you need any help in doing this, please feel free to get in touch. We’d be happy to help you.

The information provided within our E-Newsletters are general in nature to raise awareness of certain issues that may affect our clients. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from a professional advisor before you take any action or refrain from action.

Whilst we endeavour to use reasonable efforts to furnish accurate, complete, reliable, error free and up-to-date information, we do not warrant that it is such. We disclaim all warranties.

The information can only provide an overview of the regulations and matters for consideration in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice.