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HMRC Agent Update 142 has officially been released as of April 16, 2026, signaling a definitive shift in the UK’s tax landscape. This update provides the final technical roadmap for the mandatory transition to Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), which became live on April 6.
For practitioners, the message is clear: the era of “traditional” manual or paper-based reporting for property and trade businesses is over for those above the £50,000 turnover threshold. This update specifically mandates that all cessation notifications for these businesses must now be handled through MTD-compatible software.
MTD for ITSA: The Digital Mandate is Live
The second week of the 2026/27 fiscal year marks the point of no return for digital compliance. Agent Update 142 clarifies the operational requirements for the millions of self-employed individuals and landlords now in scope.
- Digital Cessation Reporting: If a trade or property business ceases operations, agents must now use MTD-compatible software to notify HMRC. Traditional forms are being phased out to ensure a “single digital thread” for the taxpayer’s journey.
- The £12.71 Living Wage: The update confirms the new National Living Wage (NLW) for those aged 21 and over has risen to £12.71 per hour. Payroll providers must ensure this rate is applied to the first pay period starting on or after April 1, 2026.
- Statutory Sick Pay (SSP) Overhaul: In a major policy shift, the “waiting days” for SSP have been removed. Employees are now eligible for sick pay from Day 1, and the Lower Earnings Limit has been abolished, meaning all employees qualify regardless of income levels.
The “SME Squeeze”: Homeworking and Reliefs
HMRC is also using Update 142 to tighten certain relief pathways while expanding others for small employers.
| Provision | Previous Status | Update 142 Status (April 2026) |
| Homeworking Expenses | £6/week relief available | Relief for non-reimbursed costs removed. |
| Small Employers’ Relief | 8.5% Compensation | Increased to 9% (109% total reclaim). |
| National Living Wage | £11.44 (2025) | £12.71 per hour. |
| Reporting Method | Manual/Digital Hybrid | Mandatory MTD Software for in-scope entities. |
HMRC Technical Note: “With the removal of the homeworking tax relief and the introduction of day-one SSP, agents should prioritize payroll audits this month. The shift to MTD-compatible cessation notifications is a precursor to the 2027 threshold drop to £30,000.”
