The UK government has unveiled new tax and customs reforms that include consultations on VAT, Income Tax Self Assessment, customs modernisation and compliance measures, alongside initiatives to expand digital services and strengthen tax enforcement.
The UK government has unveiled a broad package of tax and customs reforms aimed at simplifying compliance, expanding digital services and strengthening tax enforcement. Announced in a statement by Exchequer Secretary to the Treasury Dan Tomlinson on 23 June 2026, the measures build on commitments made in the HMRC Transformation Roadmap published in July 2025 and reaffirmed at Budget 2025.
The package includes a series of consultations on tax policy, customs modernisation and compliance initiatives intended to reduce administrative burdens for taxpayers and businesses while improving fairness and protecting government revenue.
Tax simplification measures
VAT relief for social housing land
The government has launched a consultation on introducing a new zero rate of VAT for the sale of land intended for the construction of social housing. The consultation will examine how the current rules operate and seek views on whether the proposed relief would help reduce barriers to housing development while remaining fair and fiscally sustainable.
Review of employer travel expense rates
HMRC will review its Benchmark Scale Rates (BSR) and Overseas Scale Rates (OSR), which employers may use to reimburse employee travel expenses without checking individual receipts.
The review will consider whether BSR better reflects current travel costs and whether OSR can be simplified by aligning it more closely with domestic reimbursement rules.
More timely income tax self assessment payments
The government has opened a consultation on implementing more timely payment arrangements for Income Tax Self Assessment (ITSA).
Under proposals announced at Budget 2025, taxpayers with Pay As You Earn (PAYE) income who also submit Self Assessment returns would begin paying more of their estimated annual liabilities through PAYE from April 2029. The consultation also considers reforms to Payments on Account for other Self Assessment taxpayers, with the aim of spreading tax payments more evenly throughout the year.
Review of PAYE settlement agreements
HMRC has issued a call for evidence on PAYE Settlement Agreements (PSAs) to examine how employers apply the current rules and identify areas of complexity or uncertainty.
The review will help determine whether legislative or administrative changes are needed to reduce compliance burdens and improve consistency.
Consultation on company distributions rules
The government is consulting on modernising the rules governing whether payments made by companies to non-corporate shareholders fall within the distributions regime.
The review reflects the complexity of legislation that, in many cases, has remained largely unchanged since 1965 and aims to ensure the rules operate as intended without disrupting commercial practice.
Digital option to tax process
HMRC will replace paper-based procedures for the option to tax with a digital system covering notifications, revocations and VAT registration cancellations.
The new process is expected to include features such as bulk uploads, following discussions with business groups and industry representatives.
Double taxation proposals for overseas entities
The government is consulting on proposals affecting members of US Limited Liability Companies and other reverse hybrids.
The reforms seek to remove unintended cases of double taxation arising from differences in how certain overseas entities are treated for tax purposes.
First Time Buyer ISA
A consultation has also been launched on implementing a new First Time Buyer ISA, which is intended to replace the Lifetime ISA with a simpler savings product designed to support home purchases.
Help to save reform
The government confirmed that the reformed Help to Save scheme will operate through a multi-provider model, allowing financial institutions to offer accounts directly to eligible customers in an effort to improve accessibility.
HMRC digital transformation
HMRC said it continues to improve customer guidance and digital services as part of its wider transformation programme.
During the past year, the department updated more than 4,000 guidance pages and has now developed 118 interactive guidance tools. Customer feedback indicates that nearly 80% of users were able to complete their task using the interactive guidance, while HMRC data shows more than 96% did not subsequently visit HMRC’s contact pages.
The department is also continuing work under its Better Letters Together initiative to improve the clarity of correspondence sent to taxpayers.
Customs modernisation
Consultation on customs reform
The government has launched a call for evidence seeking industry views on the future of the UK’s customs regime, including opportunities arising from trade digitalisation and technological change.
Digital trade and artificial intelligence
HMRC plans to expand digital customs services by testing Electronic Trade Documents and participating in the next phase of the Department for Business and Trade’s Digital Trade Corridors programme.
The department will also trial the use of artificial intelligence to assist customs caseworkers with real-time documentary checks at the border.
Customs intermediary standards
Following publication of a new standard for customs intermediaries earlier this month, the government will develop a voluntary certification scheme and consult on mandatory registration requirements for customs intermediaries.
Digital ATA Carnets
The UK adopted digital ATA Carnets from 1 June 2026, becoming one of the first countries to digitise the international “passport for goods” used for the temporary movement of goods across borders.
Northern Ireland duty reimbursement scheme
Legislative changes that took effect on 26 May 2026 simplify access to the Duty Reimbursement Scheme for goods brought into Northern Ireland that are later shown not to be “at risk” of entering the EU market.
The reforms are intended to ease cash-flow pressures by making duty repayments more accessible.
Compliance and enforcement measures
Low value imports
The government will accelerate reforms to the customs treatment of low value imports by six months, bringing implementation forward to no later than October 2028.
Legislation is expected to be introduced through this year’s Finance Bill following publication of the consultation response.
Online marketplace VAT liability
A consultation has been launched on extending Online Marketplace VAT Liability to cover both UK and overseas businesses selling goods through online marketplaces.
The proposals are intended to reduce VAT non-compliance and prevent overseas sellers from falsely presenting themselves as UK-based businesses.
Electronic sales suppression
The government is consulting on new software standards for Electronic Point of Sale and Mobile Point of Sale systems to combat electronic sales suppression, which allows traders to under-report sales and evade tax.
The proposed standards aim to improve record-keeping while minimising additional compliance burdens for legitimate businesses.
Recovery of lower-value tax debts
HMRC has also opened a consultation on extending its powers to recover lower-value tax debts from customers who have failed to respond after repeated contact attempts despite being able to pay.
Under the proposals, eligible debts could be recovered through regular instalments directly from customer accounts, subject to safeguards intended to ensure the powers are exercised fairly and proportionately.
The reforms mark the next phase of the government’s programme to modernise the UK’s tax and customs framework through greater digitalisation, simplified administration and targeted enforcement. Many of the measures are now subject to consultation, with stakeholder feedback expected to shape future legislation and implementation as HMRC continues its wider transformation agenda.
