SME Accounting News & Deep Dives: HMRC MFA Deadline, Mandatory Payrolling & Doubled Corporation Tax Penalties
- Aug 28
- 6 min read
By Richard | 28 August 2026
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If you have searched for an accountant near me, you may be looking for more than annual accounts. Growing limited companies need help keeping up with changing HMRC systems, payroll rules, tax penalties and planning decisions.
This week’s SME accounting update covers six important developments:
HMRC’s mandatory Multi-Factor Authentication deadline for agents
Payrolling benefits in kind from April 2027
Higher Corporation Tax late-filing penalties
Making Tax Digital for Income Tax auto-enrolment
New advisory fuel rates from 1 September
Planning for the Autumn Budget on 28 October
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1. HMRC agent MFA: automatic activation starts on 28 September
HMRC’s voluntary registration period for Multi-Factor Authentication (MFA) has now closed.
Agents who did not activate MFA voluntarily will have it switched on automatically between 28 September and 15 October 2026. HMRC has indicated that agents may not receive advance notice of the exact date their account is activated.
MFA is designed to add an extra layer of security when agents access HMRC online services. Once enabled, it may affect the way an agent accesses services for Corporation Tax, PAYE, VAT and other client matters.
For SMEs, the main risk is disruption. If your accountant or tax adviser cannot access HMRC systems, a filing or payroll issue could become harder to resolve close to a deadline.
What should your business do?
Ask your current adviser:
Has MFA already been activated?
Who in the firm can access your HMRC agent account?
Is there a backup process if the main user loses access to their authentication device?
Are important filing deadlines being monitored separately from HMRC account access?
If you are changing adviser or looking for reliable accountants for small business, security and HMRC access procedures should be part of your questions.
2. Mandatory payrolling of benefits in kind is being phased in
The move away from end-of-year reporting for benefits in kind is approaching, but HMRC has revised the timetable.
From 6 April 2027, mandatory payrolling will apply to:
Company cars
Car fuel
Vans
Van fuel
Employer-provided medical benefits
Most other benefits in kind are expected to move into mandatory payrolling from April 2028. Employment-related loans and living accommodation will remain subject to separate treatment for the time being.
Under the new process, employers will report taxable benefits through payroll and Real Time Information (RTI). This means the employee’s tax position is adjusted during the year rather than relying entirely on a later P11D process.
HMRC has also indicated that voluntary payrolling for other benefits will be available from November 2026, giving some employers an opportunity to prepare early. Your payroll software and adviser should confirm exactly what can be supported and from which tax year.
Why this matters to growing SMEs
Benefits are often managed informally in smaller companies. A director may arrange a company vehicle, add private medical cover or provide fuel without having a complete benefits register.
That approach becomes riskier when benefits must be identified and processed in real time.
Before April 2027, review:
Every benefit currently provided to directors and employees.
The date each benefit started or changed.
Company car and van details, including private fuel arrangements.
Medical insurance or similar employer-funded benefits.
Whether your payroll software can calculate and report the benefits correctly.
How changes will be communicated to employees whose monthly tax deductions may change.
The first year is expected to include some protection against penalties for genuine inaccuracies connected with the new mandatory process. However, normal RTI filing and payment obligations will still apply. A soft landing is not a reason to delay preparation.
This is an area where a specialist business accountant UK companies can work with can save considerable administration.
3. Corporation Tax penalties have increased, but there is no £200 daily penalty
The fixed Corporation Tax late-filing penalties increased from 1 April 2026.
There has been confusion around the phrase “doubled penalties”. The fixed penalties have doubled, but there is not a £200 daily penalty for a late Company Tax Return.
For returns with a filing date on or after 1 April 2026, the broad structure is:
£200 when the Company Tax Return is late
A further £200 if it remains outstanding more than three months after the filing deadline
A possible 10% tax-geared penalty on unpaid tax after six months
A further 10% tax-geared penalty after 12 months
For companies with a pattern of repeated late filing, the fixed penalties can be significantly higher. The penalty for a third consecutive late return can rise to £1,000, with a further £1,000 potentially applying where it remains more than three months late.
Late payment is separate from late filing. Corporation Tax is normally due nine months and one day after the end of the accounting period, while the Company Tax Return is normally due within 12 months of the period end. Late payment interest accrues daily and is set by HMRC by reference to Bank Rate plus the relevant margin.
HMRC’s automatic penalty notices were paused while system changes were made. Those notices have now resumed. Not receiving a notice during the pause did not remove the underlying liability.
You can check the current late-filing rules and deadline position in HMRC’s Corporation Tax penalties guidance.
Practical response for company directors
Do not wait for your year-end accounts to be “nearly ready” before checking the deadline. Build in earlier internal dates for:
Closing the bookkeeping period
Reviewing director loan accounts
Confirming stock, work in progress and fixed assets
Checking tax provisions
Approving the accounts
Filing the CT600
Paying the Corporation Tax
If your business has missed deadlines before, this is a good time to speak to corporation tax accountants who can put a repeatable process in place.
4. MTD for Income Tax: auto-enrolment starts in September
Making Tax Digital for Income Tax is separate from a limited company’s Corporation Tax obligations.
From September 2026, HMRC will start automatically enrolling individuals who are within scope but have not registered themselves. HMRC has also published guidance for taxpayers who missed the first quarterly update deadline on 7 August 2026.
This may affect company directors who also receive income from a sole-trade activity, property business or another source outside their limited company.
If you are affected, check:
Whether HMRC has already enrolled you
Which business information HMRC holds
Whether your accounting software is compatible
Whether the missed quarterly update needs to be submitted
Whether the figures need correcting before the next update
Self-Assessment tick-box
Self-Assessment tick-box: If you are a limited company director who receives dividends, untaxed income or income from a separate business activity, check whether you have a personal Self-Assessment obligation. The company’s accounts do not replace your personal tax return.
If you need personal tax support as well as company accounting, you can explore our Self-Assessment accountant service.
5. Company car advisory fuel rates change on 1 September
HMRC’s revised advisory fuel rates apply from 1 September 2026.
The new rates include:
Petrol: 14p, 17p or 27p per mile depending on engine size
Diesel: 15p, 16p or 22p per mile depending on engine size
Electric cars: 7p per mile for home charging and 15p per mile for public charging
These rates are relevant when reimbursing business mileage in a company car or calculating repayments for private fuel.
Employers should update payroll and expense systems, tell drivers which rates apply and keep a clear record of business and private mileage. The previous rates can generally be used for up to one month after a change, but your payroll process should still be updated promptly.
The latest rates are also summarised in the SME Tax Update for 27 August 2026.
6. Autumn Budget 2026: start planning before 28 October
The Autumn Budget is scheduled for 28 October 2026 and is expected to be the first Budget of the new government.
No one can know the final announcements in advance, but growing SMEs should prepare useful information now. Your accountant will be able to assess the effect of confirmed measures much faster if your records are up to date.
Prepare:
A 12-month cash-flow forecast
A list of planned equipment and investment
Current staffing and payroll costs
Director salary and dividend information
R&D and innovation expenditure
Current borrowing and interest costs
Any planned expansion, acquisition or restructuring
Deloitte’s 2026 tax updates have highlighted the continuing importance of investment allowances, R&D support and employee incentive planning. These areas may be relevant to companies planning growth, but decisions should be based on your actual numbers rather than headlines.
SME action list for this week
Confirm your adviser is ready for HMRC MFA before 28 September.
Record all company cars, vans, fuel and medical benefits.
Ask your payroll provider about mandatory payrolling from April 2027.
Check every upcoming Corporation Tax filing and payment deadline.
Review whether any director has a personal MTD or Self-Assessment obligation.
Update company car advisory fuel rates from 1 September.
Prepare cash-flow and investment information ahead of the Autumn Budget.
If you are searching for an accountant near me, the right adviser should help you manage compliance while also understanding your growth plans. Use Accountant Search’s curated accountant matching service to share your requirements and be matched with suitable professionals.
For companies that need more focused support, explore our limited company accountant service.
This article is based on HMRC and industry updates available on 28 August 2026. Tax rules and implementation guidance can change, so obtain advice on your company’s circumstances before acting.
Sources and further reading
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