Summer 2026 tax update – key announcements for individuals and businesses

The government has announced a wide ranging package of tax consultations and proposed reforms affecting individuals, businesses and employers. While many measures are still at the consultation stage, they provide a useful indication of the direction of future tax policy.

Individuals

Several changes have been announced for individual taxpayers. Draft legislation has been published to modernise the capital gains tax holdover relief for business assets, including changes to the definition of "chargeable assets" used when calculating relief on shares.

The government has said that it also plans to simplify inheritance tax reporting for certain trust transfers and trust events.

Following the ISA reforms announced in the autumn budget last year, the introduction of anti avoidance rules have been confirmed, including a 22% tax charge on interest earned on cash held within non cash ISAs.

Consultations are also underway on introducing more timely income tax self assessment (ITSA) payments.  Current proposals would require taxpayers with both PAYE and ITSA income to begin paying forecast liabilities during the tax year from April 2029, with similar reforms being considered for other ITSA taxpayers.

Other consultations cover company distributions to shareholders, the tax treatment of UK residents in US limited liability companies, a new ISA product for first time buyers and voluntary national insurance contributions.

Businesses and employers

For companies, the government plans to amend the definition of "augmented profits" for corporation tax quarterly instalment payments. The aim is to prevent businesses having to make quarterly payments solely because they receive certain tax credits, including R & D tax credits.

The government has also published its response to consultation on land remediation relief, setting out its approach to future reform.

Employers should note that benchmark scale rates for travel expenses and overseas rates will be reviewed, while clarification is expected on the tax treatment of globally mobile directors.  Views are also being sought on possible reforms to PAYE settlement agreements.

VAT, customs and tax administration

The government is consulting on extending online marketplace liability for VAT rules to UK based businesses and introducing a zero rate of VAT for land used to build social housing.  It will also explore how VAT data held in digital accounting systems could improve HMRC efficiency.

Customs reforms continue with the introduction of digital ATA Carnets, a voluntary customs disclosure framework by the end of 2026, improved standards for customs intermediaries and stronger customs penalty powers. Delivery of the new low value import customs arrangements has also been accelerated to October 2028.

Finally, HMRC plans to strengthen its compliance powers through reforms to information and inspection powers, tougher action against tax avoidance promoters, expanded debt recovery proposals, mandatory direct debit for PAYE and VAT under consultation and a new criminal offence for reckless false tax declarations. The government has also confirmed that Peppol will become the UK's core e invoicing network ahead of mandatory electronic VAT invoicing from April 2029.

While many of these proposals are still subject to consultation, they signal significant changes ahead. Businesses and individuals should stay informed and seek professional advice where future reforms might affect their tax position.