Weekly News & Updates for UK Accountants (5-9 October 2026)

The Autumn Budget lands on 28 October, and new survey data shows what the £2.5 million cap on Agricultural and Business Property Relief is already doing to farm businesses. That is the story to act on first. Close behind it, the Conservatives used their conference to pledge no inheritance tax on the family home, and clients will be asking what it means.

The other two stories move more slowly but reach more clients. MTD for Income Tax drops to £30,000 in April 2027 with no penalty grace year, and most people emigrating from the UK are leaving tax refunds behind by skipping Form P85.

Here is the detail.

APR & BPR Cap Stalls Farm Investment Ahead of the Budget

Rural family businesses are shrinking themselves to survive the cap on inheritance tax relief. A Country Land and Business Association (CLA) survey of 700 rural family businesses, published on 6 October, found that most now sit above the £2.5 million limit on 100% Agricultural Property Relief and Business Property Relief introduced by former Chancellor Rachel Reeves. For married couples and civil partners the limit is £5 million.

The underlying problem is liquidity. Farms hold their value in land and machinery rather than cash, so a future IHT bill has to come from thin operating margins or from selling part of the business. Some owners are suppressing value instead: letting buildings deteriorate, cutting production and putting off spending on machinery and infrastructure.

The CLA has asked Prime Minister Andy Burnham and Chancellor John Healey to scrap the cap at the Budget. For farming and owner-managed business clients, now is the time to model exposure under the current rules and to hold off on irreversible restructuring until 28 October has passed.

Conservatives Pledge No IHT on the Family Home

Kemi Badenoch told the Conservative Party Conference in Birmingham that a future Conservative government would remove inheritance tax from the main residence and let couples pass on a further £1 million tax-free. The party says this would reduce every IHT bill and halve the number of families paying it. Full abolition was ruled out for now and kept as a longer-term aim, to be pursued once it is affordable.

The pledge leaves more questions than answers. No funding has been set out. It is unclear whether the £1 million applies per couple or per estate, or how single people and non-family beneficiaries would be treated. Badenoch also called for urgent simplification of a tax code she said now runs past 35,000 pages.

None of this is law. Clients who raise it should hear that their estate planning has to work under the rules as they stand, not the rules an opposition party hopes to introduce.

MTD for Income Tax Drops to £30,000 With No Soft Landing

Taxpayers joining MTD for Income Tax next April will not get the grace year the first cohort had. The soft-landing penalty regime ends on 5 April 2027, so anyone with qualifying income above £30,000 faces penalty points and late filing penalties from their first year. Asked about any concession for this group, HMRC said there was no update.

The threshold test is the trap. Eligibility turns on gross income from self-employment and property, before expenses, not on profit. A sole trader with modest profits can still be in scope, and many unrepresented taxpayers will not realise it. Those with both trading and rental income need separate digital records and quarterly updates for each.

The threshold is not indexed, so rising incomes will keep pulling people in, and it falls again to £20,000 in April 2028. HMRC is now reaching beyond the profession through bodies such as the British Retail Consortium, OneDance and Yoga Alliance Professionals.

Check every client whose combined gross trading and rental income sits near £30,000, not just those whose profits do. The 400,000 without an agent are also a sizeable pool of prospective clients.

Most UK Emigrants Skip Form P85 & Miss Tax Refunds

Fewer than three in ten British nationals who emigrated last year told HMRC they were leaving. FOI data obtained by UHY Hacker Young shows 69,000 digital Form P85 submissions in 2025/26. ONS figures show 246,000 British nationals emigrated in 2025.

Part of the gap is explained by the rules. A P85 is not mandatory, and Self Assessment filers report their departure through the residence pages of their return. The cost falls on everyone else. Someone leaving part-way through the tax year has usually had personal allowances applied on a cumulative PAYE basis, and the P85 is what prompts HMRC to run a final calculation. Without it, any refund goes unclaimed.

For any departing client outside Self Assessment, treat the P85 as standard. They will need their P45 figures, details of any UK home and continuing UK income, and expected UK days for the next three tax years. Advise them to keep a UK bank account open until any refund has been paid.

Also In The News

• Weekly News & Updates for UK Accountants (28 September - 2 October 2026) - Last week's round-up covering the stories that shaped the week for UK practitioners.
• How to Onboard MTD Clients Efficiently in 2026 - A practical guide to bringing MTD clients on board without adding to your admin.
• Last-Minute MTD Resources for Accountants - Resources to help you onboard, price and engage MTD clients quickly.
• Are E-Signed Engagement Letters Valid in the UK? - What you need to know about the validity of e-signed engagement letters in the UK.

Conclusion

The pattern this week is inheritance tax at the centre of the political argument while the compliance net widens with far less noise. The government faces pressure to reverse the relief cap, and the opposition promises to go further. Meanwhile MTD reaches another million taxpayers without a grace year, and HMRC's own data shows how many leavers fall through the gaps.

The immediate work is to review farming and owner-managed business clients before 28 October and hold irreversible decisions until after the Budget. Next, check the client list against the £30,000 gross threshold well before April 2027, and make the P85 a standard step for anyone leaving the UK.

We publish these updates every week. Follow us to get next week's round-up as soon as it lands.