A summary of the key announcements from Tax Update 2026 is provided below. Detailed analysis will follow in future articles. 

Taxation of individuals 

The government: 

• published draft legislation to modernise capital gains tax gift holdover relief for business assets, including amending the meaning of “chargeable assets” used within the formula that restricts the amount of relief on shares; 
• announced that it will simplify inheritance tax reporting requirements for certain non-taxpaying trust transfers and trust events; 
• confirmed the anticircumvention rules to support reforms to individual savings accounts (ISAs) announced at Autumn Budget 2025 (factsheet). These measures include the introduction of a 22% tax charge on interest paid on cash holdings held in non-cash ISAs; and
• said it will consider the circumstances in which taxpayers can make claims for tax relief on non-reimbursed employment expenses in income tax self assessment (ITSA). 

Further, the government is consulting on:

• the implementation of more timely payments for ITSA (consultation document; factsheet). This includes:
  • the proposed design of reforms announced at Autumn Budget 2025 requiring ITSA taxpayers with pay as you earn (PAYE) income to pay their forecasted ITSA liability in-year from April 2029; and
  • the potential for more timely payment for other ITSA taxpayers, such as those with ITSA income only;
• proposals to modernise the tax framework dealing with distributions made by companies to shareholders who are individuals or trusts (consultation document). The proposals, which are wide-ranging and will be considered in detail in a future article, encompass:
• the treatment of “new consideration and “repayments of capital”;
• foreign distributions;
• the interaction with the close company loans to participators regime; and
• possible reforms to the demergers provisions, and to the purchase of own shares and transactions in securities rules;
• the tax treatment of UK resident members of US limited liability companies and other reverse hybrids. This was published on 10 June 2026 and is the subject of an earlier article; and
• the implementation of a new, simpler ISA product to support first time buyers to purchase a home (consultation document).

The government is also seeking evidence on voluntary national insurance contributions (NIC) to help inform future changes.

Taxation of companies

The government: 

• plans to introduce secondary legislation to amend the definition of “augmented profits” for the purposes of corporation tax quarterly instalment payments (QIPs). The government’s intention is to prevent companies from having to make QIPs solely as a result of receiving certain tax credits, such as research and development expenditure credits; and
• published a summary of responses to an earlier consultation on land remediation relief (LRR), setting out how the government will approach reforming LRR.

Employment taxes

The government:

• will review benchmark scale rates and the overseas scale rates used by employers to reimburse employees for certain travel and accommodation costs;
• intends to clarify the tax treatment of globally mobile directors to ensure a consistent application of the rules; and
• is seeking views on PAYE settlement agreements to help inform possible changes in the future.

VAT 

The government:

• is consulting on:
  • the proposed extension of the VAT online marketplace liability rules to UK based businesses (consultation document; factsheet); and
  • the introduction of a new zero rate of VAT for the sale of land intended for the construction of social housing (consultation document); and
• will explore whether better use of VAT data that businesses already hold in their digital accounting systems could help HMRC work more efficiently.

Customs duties 

The government has announced that it will accelerate the delivery of the new low value import customs arrangements by six months to October 2028 at the latest. As explained in an earlier article, ICAEW warned in its response to a consultation on the measure that the proposed implementation date of March 2029 is too late to protect UK retailers and fully compliant overseas sellers effectively. 

Further, the government announced a package of measures intended to simplify and modernise the customs system, including: 

• seeking views on trade digitalisation and the opportunities and challenges it poses for the future of the UK customs regime;
• continuing the move to digital carnets. An ATA carnet provides relief from customs duty and import taxes where goods are temporarily imported into a country within the ATA carnet system. On 1 June 2026, the UK introduced digital ATA Carnets (e-carnets) alongside the EU, Norway and Switzerland. HMRC has published initial guidance on the transition away from paper carnets; 
• developing and publishing a voluntary disclosure framework for customs by the end of 2026; 
• improving the quality of customs intermediaries. As explained in an earlier article, a new standard for intermediaries was launched on 2 June 2026. The government will now work to develop a voluntary certification scheme for the standard and has published a consultation on new mandatory registration for intermediaries;
• giving HMRC new powers to publish the names of businesses that agree compound settlements (ie, financial penalties, paid to avoid prosecution) for strategic export and sanctions offences; and
• strengthening the customs civil penalties framework. 

Tax administration and other changes 

The government will:  

• reform the publishing details of deliberate defaulters policy, allowing HMRC to publish more information about deliberate non-compliance;
• introduce a package of measures to amend existing legislation aimed at tackling promoters of tax avoidance, including by extending the legislation so that it more fully covers VAT avoidance schemes; and
• bring forward a package of reforms to modernise HMRC’s information and inspection powers. 

Further, the government will consult on: 

• proposals to extend existing powers to enable recovery of lower value tax debts across all taxes, via direct collection by instalments from bank accounts. This would apply to customers who can pay but have not responded to multiple contact attempts from HMRC (consultation document; factsheet);
• plans to require payments of PAYE and VAT liabilities by direct debit (consultation document);
• the introduction of a criminal offence of reckless untrue declarations or reckless false statements for direct tax matters, aligning the legal framework with existing offences in indirect tax (consultation document); 
• proposals to remove NIC debt from the scope of the Limitation Act 1980 and to align NIC recovery processes more closely with other forms of taxation; and
• the introduction of software standards for the Electronic and Mobile Point of Sale (EPOS/MPOS) Sector to explore how best to embed standards across the latest products and innovations (consultation document). 

The government also confirmed that the electronic procurement system Peppol will be the core interoperability network for e-invoicing in the UK. This follows the announcement, at Autumn Budget 2025, that the government will require all VAT invoices to be issued in a specified electronic format from April 2029.