HMRC's Tax Update 2026: 40 New Measures and What They Mean for You

title: "HMRC's Tax Update 2026: 40 New Measures and What They Mean for You" category: Work & Income date: 2026-06-29 tags: [HMRC, tax, self assessment, VAT, MTD, Making Tax Digital] image: https://picsum.photos/seed/hmrc-tax-update-2026/2400/1350

On 23 June 2026, HMRC published its Tax Update 2026: Simplification, Modernisation and Fairness — a package of 40 measures affecting individuals, sole traders, landlords, and companies. Here is a plain-English breakdown of the changes most likely to affect you.

Self Assessment: Pay More Tax Throughout the Year

One of the most significant announcements affects PAYE employees who also file a Self Assessment return — which includes side-income earners, landlords, and those with investment income. The government has launched a consultation on requiring these individuals to pay more of their forecasted Self Assessment liability in-year through their PAYE code, from April 2029.

Currently, PAYE taxpayers pay their Self Assessment bill by 31 January following the tax year. Under the proposed system, HMRC would adjust your PAYE code to collect more tax as you go, similar to how underpaid tax is already collected. The aim is to reduce the large January bill — but it also means less opportunity to earn interest on money you are holding throughout the year.

This is a consultation, not yet law. If you want to have your say, HMRC's consultation responses page sets out how to participate.

VAT: Potential Zero Rate for Social Housing Land

The government has opened a consultation on a new zero rate of VAT for the sale of land intended for social housing construction. This is a targeted measure aimed at unlocking land supply for affordable homes. For most consumers it is background policy, but housing developers and housing associations should pay close attention.

E-Invoicing: Peppol Is Coming

The government confirmed that Peppol will be the interoperability standard for e-invoicing in the UK, ahead of a mandate expected in 2029. Peppol is already the dominant e-invoicing network across the EU and Australia. UK businesses that trade internationally — particularly with European counterparts — will already be familiar with the format.

For most small businesses, 2029 seems a long way off. But accounting software providers will be building Peppol compatibility into their platforms throughout 2026–2028, and it is worth ensuring your current software will keep up.

New Criminal Offence for Reckless Tax Declarations

The government is consulting on introducing a criminal offence of reckless untrue declarations or reckless false statements in direct tax matters. This aligns income tax and corporation tax with existing criminal penalties that already apply in VAT. The practical effect for honest taxpayers is minimal — this is aimed at deliberate non-compliance. But it underlines the importance of accurate record-keeping.

Advance Tax Certainty Service Launches July 2026

From 1 July 2026, HMRC will operate an Advance Tax Certainty Service for businesses with at least £1 billion of qualifying UK expenditure. This lets large companies get binding HMRC rulings on how major investments will be taxed before committing capital. It will not affect most readers directly, but signals HMRC's willingness to engage with business rather than issue retrospective demands.

Foreign Permanent Establishments: Corporation Tax Change

From accounting periods starting on or after 1 January 2027, profits and losses of overseas branches of UK-resident companies will be mandatorily exempt from UK corporation tax. Currently, companies can elect in or out of the exemption. The mandatory switch removes planning flexibility for some groups, but simplifies administration overall.

Making Tax Digital for Income Tax: Reminder

This was not new in the June update, but Making Tax Digital for Income Tax (MTD ITSA) remains on course to apply from 6 April 2026 for sole traders and landlords with qualifying income over £50,000. If you are in this category and have not yet signed up, you are already required to keep digital records and submit quarterly updates. Check HMRC's MTD guidance immediately.

International Comparison

For context, Australia has long required quarterly tax reporting for businesses via its Activity Statement system, and the US requires quarterly estimated tax payments from self-employed individuals. The UK's move towards more frequent reporting is part of a global trend.

Key Numbers

• 40 measures in Tax Update 2026
• MTD ITSA threshold from April 2026: £50,000 qualifying income
• In-year PAYE collection proposed from April 2029
• Advance Tax Certainty Service launches 1 July 2026

Sources

• GOV.UK: Tax Update 2026 summary
• ICAEW: Significant changes announced at Tax Update 2026
• KPMG: Tax Update 2026 summary
• FSB: Making Tax Digital 2026

Educational content only — not financial advice.