‘Tax update 2026’: Exchequer Secretary to Treasury updates Parliament

Just one day after Sir Keir Starmer resigned as Prime Minister, the Exchequer Secretary to the Treasury Dan Tomlison delivered a written ministerial statement in Parliament which contained 40 announcements as part of the Government's ‘Tax update 2026’, the first tax announcements of any significance since the 2025 Autumn Budget. A summary of the key announcements is outlined below. More detailed analysis will follow where necessary in the coming weeks. The detailed email from HMRC on the announcements made can be found on our website.

The aim of these reforms is to simplify and modernise the tax and customs system, building on the commitment first made in the HMRC Transformation Roadmap published in July 2025 and confirmed at Budget 2025.

E-invoicing

The Government confirmed that the electronic procurement system Peppol will be the core interoperability network for e-invoicing in the UK, the same system used in Ireland and other EU countries. This follows the Autumn Budget 2025 announcement that the Government will require all VAT invoices to be issued in a specified electronic format from April 2029,

Individuals 

• Draft legislation has been published to modernise Section 165 capital gains tax gift relief for business assets; this includes amending the meaning of “chargeable assets” which is used to calculate partial gift relief when gifting shares in a company which owns chargeable non-business assets; 
• More information on the reforms to ISAs was published which will include a 22 percent tax charge on interest paid on cash holdings held in non-cash ISAs; and
• The consultation announced at the Autumn Budget on more timely payments for income tax self-assessment (ITSA) was launched and a factsheet was published. This includes a requirement that ITSA taxpayers with PAYE income will pay their forecasted ITSA liability in-year from April 2029, and it also examines the potential for more timely payment for other ITSA taxpayers, such as those with ITSA income only;
• A consultation was launched examining the framework for distributions made by companies to shareholders who are individuals or trusts. The proposals in this are wide-ranging; and
• The Government is also seeking evidence on voluntary national insurance contributions to help inform future changes.

Administration and HMRC powers

The Government is aiming to:  

• 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;
• Bring forward a package of reforms to modernise HMRC’s information and inspection powers; and
• Introduce a new power which will enable HMRC to publish the names of businesses that agree compound settlements (i.e., financial penalties, paid to avoid prosecution) for strategic export and sanctions offences.

 The following consultations were also launched: 

• A consultation which will 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 those who can pay but have not responded to multiple contact attempts from HMRC;
• A consultation which would require payments of PAYE and VAT liabilities by direct debit;
• A consultation on 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; and
• A consultation on the introduction of software standards for the electronic and mobile point of sale sector to explore how best to embed standards across the latest products and innovations. 

Companies

There are plans to introduce secondary legislation to amend the definition of “augmented profits” for the purposes of corporation tax quarterly instalment payments.

Employment taxes

• The government will review the benchmark scale rates and the overseas scale rates used by employers to reimburse employees for certain travel and accommodation costs;
• The tax treatment of globally mobile directors is being reviewed to ensure there is consistent application of the rules; and
• The Government has published a call for evidence to explore how PAYE Settlement Agreements are used in practice.

VAT 

• The Government has launched a consultation on the proposed extension of the VAT online marketplace liability rules to UK based businesses and a factsheet has also been published; and
• The Government intends to explore whether better use of VAT data that businesses already hold in their digital accounting systems could help HMRC work more efficiently.

Customs duties 

It was announced that the Government will accelerate the delivery of the new low value import customs arrangements by six months to October 2028 at the latest. A package of measures was also announced which it is intended will simplify and modernise the customs system which includes developing and publishing a voluntary disclosure framework for customs by the end of 2026 and “improving the quality of customs intermediaries”.

A new standard for customs intermediaries was published earlier this month. The government  is now working to develop a voluntary certification scheme for the standard and has published a consultation on mandatory registration for customs intermediaries.