Tax update June 2026: simplification, modernisation, and fairness

The Government has announced a package of tax and customs measures aimed at simplifying processes, modernising systems and improving fairness across the tax system.  

VAT

Digitising the option to tax process

Plans have been announced to digitise the option to tax process, with new online channels for notifications and revocations, alongside bulk upload functionality and links to VAT deregistration. 

While these enhancements are welcome, many organisations already use email rather than paper submissions, so the practical impact may be modest. Implementation is expected before the end of 2026. 

VAT on land for social housing

HMRC has launched a consultation on the VAT treatment of land intended for new social housing. The proposal introduces a zero rate for sales of bare land to registered social housing providers, which could reduce reliance on “golden brick” structures.

The consultation is open until 18 August 2026, with feedback sought on both the current rules and the design of the proposed relief.  

Low value imports and online marketplace liability

Reforms are proposed to the treatment of low value imports, aimed at ensuring fair competition and addressing the challenge of ultra‑low cost goods entering the UK market.  

In addition, a consultation has been launched on extending VAT online marketplace liability to UK businesses, as part of HMRC’s continued focus on tackling non‑compliance in the digital economy.  

Enhanced use of VAT data

The Government is reviewing how VAT data already held within business systems can be better used to support compliance and improve HMRC efficiency. 

This reflects the broader trend towards increased digitalisation and the use of data analytics within tax administration. 

Administration

Direct Debit requirements for VAT and PAYE

A consultation has been launched on the potential introduction of mandatory Direct Debit payments for VAT and PAYE, including possible enforcement measures and incentives to support adoption.  

Recovery of lower value debts

HMRC is consulting on strengthened powers to recover lower value tax debts, including VAT, with a focus on enabling more direct recovery from those able to pay.  

More frequent payments for Income Tax Self Assessment (ITSA)

The Government is considering reforms to collect Income Tax Self Assessment liabilities more regularly throughout the year, rather than through the current January and July payment cycle.  

From April 2029, taxpayers with PAYE income may be required to pay part of their anticipated Self Assessment liabilities through PAYE during the year.  

These changes are not expected to increase the overall tax payable but would shift the timing of payments, potentially improving cash flow management and reducing large balancing payments.  This is an extension of the current PAYE coding adjustments or HMRC’s voluntary Budget Payment Plan, which allows taxpayers to make regular payments towards future liabilities.  

Income Tax, National Insurance and Capital Gains Tax

ISA reform

An extension of the pre-announced Autumn Budget 2025 changes to ISAs has been shared. From April 2027 in addition to the limit on the annual Cash ISA allowance for individuals under 65, which will reduce from £20,000 to £12,000, an 22% Income Tax charge will apply to interest earnt on cash held within a stocks and shares ISA.

For those aged 65 and over, the £20,000 Cash ISA allowance will be retained.

While ISAs remain highly tax‑efficient, particularly for additional rate taxpayers, these changes will restrict flexibility and planning opportunities. 

National Insurance for internationally mobile individuals

The Government intends to formalise existing practice for non‑resident directors attending a limited number of UK board meetings. Under the proposal, such individuals will be able to perform restricted UK duties without triggering a UK National Insurance liability.

Capital Gains Tax relief on gifts of business assets

Proposed changes to gift holdover relief aim to remove distortions caused by the interaction with the Substantial Shareholding Exemption (SSE) and Intangible Fixed Asset (IFA) regimes will allow the restoration of the previous rules improving its availability. This will be particularly relevant for family businesses considering succession planning.

Next steps

Many of the measures remain at consultation stage, with further detail expected over the coming months. If any of these changes are relevant to your circumstances, we recommend seeking advice to understand the potential impact and planning opportunities.