UK Publishes Statement on Future Steps for Modernization and Simplification of the Tax System

On June 23, the UK Parliament published a statement by Dan Tomlinson, Exchequer Secretary to the Treasury, outling upcoming measures to simplify tax rules and provide clearer guidance to taxpayers in the country. These reforms are based on the commitments originally made in the HMRC Transformation Roadmap published in July 2025.

Key measures of modernizing the tax system include:

– VAT treatment of land intended for social housing: a consultation on the introduction of a new zero rate of VAT for the sale of land intended for the construction of social housing is launched;

– review and uprating of Benchmark Scale Rates (BSR) and Overseas Scale Rates (OSR), used by employers to reimburse employees for the cost of meals and travel expenses;

– adjustment of payment for income tax self assessment (ITSA): a consultation on implementing more timely payments in ITSA and PAYE systems is launched;

– review of distriburion network: a consultation on the development of the rules that determine whether a payment to a company’s non-corporate shareholders falls within the distributions regime is launched;

– introduction of an option for businesses to reclaim and charge VAT on land and buildings, which are normally exempt from VAT.

Key measures of strengthening the fairness of the tax system include:

– reforms of the customs treatment of low value imports by October 2028;

– strengthening of online marketplaces tax liability both for the UK retailers and overseas ones;

– development of software standards for Electronic Point of Sale and Mobile Point of Sale systems to combat tax fraud;

– consideration of proposals to enable recovery of lower value tax debts directly form HRMC customers’ accounts in regular installments.

Statement “Tax Update 2026: simplification, modernisation and fairness”