How to reform tax policymaking in the UK

In April 2026, ICAEW identified five institutional pillars critical to building a better tax system – policymakers is one of them. In the second paper, summarised below, we focus on policymakers: the legislative and executive bodies that design, enact, and review tax policy to align with public objectives. We explore what is wrong with UK tax policymaking and how to reform it.

In the UK, decades of incremental, reactive changes, often driven by short-term political pressures, have created one of the world's longest and most complex tax codes. This complexity impedes economic growth, imposing significant compliance costs on businesses and creating uncertainty that chills investment and undermines voluntary compliance by making the system opaque and difficult to navigate.

There is broad consensus across the political spectrum of the need for reform in many areas, including, for example, moving towards a simpler, more broad-based VAT (see ICAEW’s How to fix VAT campaign). Yet these common-sense reforms never happen. One problem is that the government lacks the robust data infrastructure needed to design and evaluate such integrated packages with confidence. This is compounded by policymakers routinely using tax to pursue non-fiscal goals when other policy tools would be more efficient and effective, adding further layers of complexity to an already unwieldy system.

On paper, the UK does have a tax policymaking framework. In practice, however, it is applied inconsistently at best. Recent updates to the Tax Policy Making Principles signal a concerning shift towards "agility" – a euphemism that risks meaning less consultation, or consultation with a narrower group of stakeholders.

The solution: a coherent system for tax policy

To break this political deadlock, it is important that long-term strategy, technical implementation and political decision-making are kept separate.

This system delivers stability, legitimacy and, paradoxically, more effective government control. By establishing a durable, cross-party framework, it provides the certainty businesses need for long-term investment – a prerequisite for sustainable growth. By embedding automation considerations, software developer input and operational readiness checks into the design process, new tax rules work as intended from day one.

1: The Commission on Tax: setting the destination

A dedicated body is needed to address the major structural questions that normal politics cannot resolve, for example, how to design a tax framework that raises necessary revenue without distorting behaviour or disincentivising growth.

Such questions are beyond the reach of normal politics because the electoral cycle gives no government the time or the political cover to confront them. There is already broad expert agreement on the principles of good tax design and the relative efficiency of different tax bases. What has never happened is a sustained, structured debate about what acting on that analysis would mean. A dedicated Commission would not settle these questions in place of Parliament. Its role would be to build the analysis, model the trade-offs and test whether a durable cross-party consensus is achievable, so that elected representatives can make decisions on the firmest possible footing.

Commissioned by parliament with an 18-24-month remit, the Commission would have balanced membership including tax professionals, economists, software developers, parliamentarians and business leaders. It would explicitly consider what data infrastructure is needed to support evidence-based policymaking, how to ensure new tax rules can be efficiently automated, and how to better align tax rules with financial reporting where appropriate – all within a framework that would need to accommodate devolution while maintaining UK-wide coherence.

The Commission's output would be a framework for national taxation – a clear end goal for the UK tax system. Parliament would then formally adopt this framework, creating a democratically endorsed national objective that guides all future reforms. The framework could be refreshed every ten years, ensuring it remains responsive to changing economic, social and other policy needs.

2: The Office for Tax: managing the journey

The Office for Tax would be established as a statutory body, staffed by a permanent expert team working in close partnership with HM Treasury and HMRC, and with multi-year funding and a duty to report directly to Parliament. Board members would be appointed through an independent public appointments process, with the Chair subject to pre-appointment scrutiny by the Treasury Select Committee. Complementing existing oversight bodies, including the Office for Budget Responsibility, the Office would have a distinct mandate, focusing on tax policy coherence, technical quality and simplification.

A reformed legislative process

For any significant tax legislation, a new process would ensure technical excellence, operational readiness and democratic legitimacy. The new process to be as follows:

1. Policy mandate: The government sets a plain-English objective for a tax change, debated and approved by parliament. The Office for Tax provides an initial assessment of framework alignment and whether tax is the most effective instrument. 
2. Design and consultation: The Office for Tax manages detailed design and formal public consultation, explicitly including software developers and implementation specialists to ensure workability. This process highlights issues around automation, alignment with accounting standards, and data availability for evaluation. 
3. Independent assessment: The Office for Tax publishes a comprehensive report covering framework alignment, quality of evidence, and implementation feasibility. Government retains full authority to proceed, modify or reject recommendations, but significant deviations require a public ministerial statement justifying the decision. 
4. Operational readiness: HMRC provides a formal statement to parliament on implementation timelines and readiness, subject to scrutiny by the National Audit Office and Office for Tax to ensure implementation concerns don't become an excuse for indefinite delay.
5. Parliamentary decision: Parliament debates and votes on the final bill, armed with the Office's assessment, consultation responses, ministerial statements on any deviations, and HMRC's readiness plan.

For major structural reforms, a citizens' assembly could review proposals before parliamentary debate, helping to build broader consensus for reforms that might otherwise be considered politically impossible.

The choice ahead

Meaningful change requires more than adjusting the existing process; it demands a new system. The model proposed here – a time-limited Commission to set the destination, an independent Office for Tax to provide technical support and maintain system coherence, and democratically accountable government at the controls – provides a credible path to breaking the political deadlock that prevents sensible reform.

First, however, we must close the acknowledgement gap. Outside the tax policy community, there is remarkably little recognition that the UK tax system could be significantly better. It can and must be better. The choice is clear: continue with the perpetual, damaging instability of the current system, or commit to building a durable tax policy framework for national prosperity.