UK tax policy: the consultation pipeline

As attention turns to the Autumn Budget, the volume and breadth of tax consultations already underway raise a broader question: does the current pipeline point towards a more stable, simpler and growth-oriented tax system? Consultations and calls for evidence published over the summer have added to an already extensive programme spanning business, international, indirect, personal and employment taxes, as well as tax administration. Against the backdrop of a change of Prime Minister and the new government’s priorities, including fiscal devolution, this article considers not only some of the principal measures under review, but what the consultation pipeline may indicate about the future direction of UK tax policy.

Business taxes

The 2024 Corporate Tax Roadmap set out the government’s objective of delivering stability, predictability and certainty in the corporate tax system during the current parliament. It committed to capping the corporation tax rate at 25% and preserving key reliefs and allowances, while identifying areas for future consultation and reform, some of which are currently underway.

Following the Supreme Court decision in Orsted West/Gunfleet Sands, the government is consulting on the tax treatment of predevelopment costs, although the consultation indicates that the government is not currently minded to legislate to change the tax treatment. This is a missed opportunity to provide greater certainty following the Supreme Court decision. A targeted legislative solution to provide relief for predevelopment expenditure could help restore business confidence and support investment decisions.

The government is also considering reforms to Land Remediation Relief to more effectively encourage the remediation of brownfield and contaminated land, following an earlier review of its effectiveness. A consultation on modernising and standardising corporation tax computations has recently closed, with the government continuing to engage with stakeholders on possible reforms. This could present an opportunity to genuinely modernise, simplify and integrate the corporation tax compliance process if HMRC is prepared to invest in reform beyond the initial proposals to standardise computation formats.

International tax

The international tax arena is particularly active. This includes a further technical consultation on draft rules for the new International Controlled Transactions Schedule (ICTS). This is a significant new transfer pricing reporting requirement and although there have been many improvements compared with earlier consultations, there remain areas in the proposal where detailed reporting is required, and further simplifications are recommended to limit the compliance burden.

On Legislation Day (L-Day), the government published a welcome consultation on potential ways to simplify the process of claiming relief under double tax treaties from the obligation to withhold income tax on interest paid overseas. One option under consideration is to allow self-assessment of whether the conditions for treaty relief are met, without the need to obtain advance HMRC clearance, which would align with HMRC’s approach to royalties.  Moving to a self-assessment process could address current issues such as potential delays to the making of interest payments until clearance is received and cash flow disadvantages.

Draft legislation was also released for consultation in relation to the recent announcement that the foreign permanent establishment exemption will, in effect, be made mandatory. This is a noteworthy change and, unsurprisingly, given that the existing rules have been a standard feature of the UK regime for many years, the proposal interacts with several other parts of the corporation tax system, including RDEC and the patent box.

The government also published a technical consultation on legislation to implement the G20/OECD Inclusive Framework's Pillar Two Side-by-Side package.

While the consultations in the business and international tax area are varied in scope and intent, they are collectively tilted towards measures that support investment and simplify the tax system, although new reporting obligations also feature. The real impact, clearly, will depend on the way the changes are implemented and how the stakeholders’ feedback is reflected in resulting legislation.

Indirect taxes

The government is consulting on extending online marketplaces’ current liability for VAT on sales by overseas sellers to also cover sales by UK businesses, when the goods are in the UK at the point of sale. The aim is to further combat non-compliance whilst acknowledging the need to protect businesses not required to register for VAT and assessing the impact on the online marketplaces. Additionally, there is also a consultation on introducing a new zero rate of VAT on the sale of bare land for social housing development. We also await further details on the UK’s introduction of mandatory e-invoicing for all VAT invoices from 2029, with a roadmap to implementing this mandate due at the Budget, and the introduction of the electric vehicle excise duty regime, which is due to come in from April 2028.

In customs, the government has sought views on modernising the UK customs regime, including opportunities to simplify customs processes and make greater use of digitalisation. A separate consultation considered the introduction of mandatory registration of customs intermediaries, including proposed eligibility requirements and enforcement arrangements. The government has also responded to its consultation on reforming the customs treatment of low-value imports (LVIs), with further details expected on the design of the new arrangements, including how a proposed additional fee on LVIs would operate alongside tariffs.

Here too, the direction is mixed: digitalisation and modernisation may reduce friction, but additional marketplace and intermediary obligations could shift more compliance responsibility onto businesses.

Personal and employment taxes

Personal and employment taxes are once again areas of significant policy activity, with a broad range of consultations and calls for evidence either open or awaiting a government response.

A HMRC consultation on modernising the taxation of distributions and repayment of capital from companies closed on 14 September 2026. This is a wide-ranging consultation which covers seven areas associated with distributions and repayment of capital from companies in a single consultation. Areas of proposed change include the taxation of distributions from non-UK companies (i.e. income versus capital), purchase of own shares, demergers and transactions in securities. Deloitte’s view is that any changes that are made should enable and protect commercial transactions and the forms in which investments are made. If changes are required, the changes should be focused on specific areas of concern that HMRC are encountering in practice.

Collectively, these consultations suggest a focus on accelerating tax collection, addressing structural mismatches, and reconsidering how the tax system supports investment and entrepreneurship.

The following consultations have recently closed, and we are waiting to see how the new government intends to proceed:

• High value council tax surcharge – this is a consultation on the detailed design of a new charge on owners of residential properties in England worth £2 million or more, including liability, valuation, discounts, deferrals, appeals, billing and enforcement. The introduction of this measure is a significant departure from the existing council tax system, as it requires councils to collect council tax based on current values, potentially with different laws around where liability for this additional tax charge falls compared to general council tax.
• Timely payments in income tax self-assessment (ITSA) – this proposes in-year payments on account on a monthly or quarterly basis, replacing the current system of one in-year payment in January of the tax year and a second payment the following July. Additionally, the consultation proposes a new system for PAYE taxpayers with ITSA liabilities, whereby payments on account would be collected in-year via PAYE.
• UK resident individual members of LLCs and other reverse hybrids – consultation on potential legislative changes to mitigate double taxation for UK resident individuals investing through overseas entities, such as US LLCs, where entity classification mismatches can produce high effective tax rates. A reform that would remove mismatches resulting in a very high effective tax rate would be a positive development.
• Tax support for entrepreneurs – evidence gathering on tax support for companies starting up, scaling up and staying in the UK. Views were sought on the impact of UK tax policy on founders, investors and companies. Encouraging and supporting companies in scaling-up and staying in the UK is a key area of focus and part of the government’s growth strategy. Our view is that UK tax policy should support and actively encourage investment, growth and entrepreneurial activity in the UK. While there are specific tax technical measures that could be considered, a simple and stable tax system and reduced complexity and administrative burdens are essential for taxpayers.

On employment taxes, employers will be particularly interested in whether the PAYE Settlement Agreement process can be made more straightforward, digital and proportionate, while the voluntary National Insurance review may be relevant for individuals seeking to protect entitlement to the state pension or other contributory benefits. The separate consultation on aligning National Insurance recovery time limits and procedures with income tax could remove the separate recovery procedures HMRC currently have to go through for NIC recovery where historic employment tax compliance issues arise. Depending on where in the UK a business is located, aligning the NIC recovery time limits with tax could increase or decrease the number of years of NIC liabilities that can be recovered, so the proposals, if implemented, are likely to have winners and losers.

One of the key questions covering the above consultations is not only which measures the new government decides to pursue, but also how quickly it moves from evidence gathering to draft legislation and implementation. Taken together, the highlighted personal and employment tax pipeline indicates that these remain significant areas of review with potential changes spanning tax collection, property, internationally held structures and employer administration.

Tax administration and simplification

The tax administration consultations reflect the government’s continued focus on closing the tax gap, aiming to modernise how HMRC identifies and responds to non-compliance. Alongside proposals to improve the quality and consistency of third-party data it receives on interest income and card sales, HMRC is consulting on a new obligation for taxpayers to correct inaccuracies once they become aware of them, backed by a new Customer Correction Notice power requiring taxpayers to review and, where necessary, amend their position or explain why no correction is required. HMRC is also exploring the possibility to extend its powers to recover lower-value tax debts from persistently disengaged taxpayers and, separately, proposing a new criminal offence for reckless untrue statements in direct tax. Taken together, these consultations highlight an increasing focus on data-driven compliance, earlier intervention, and stronger enforcement tools, making this a very active area of the current tax policy landscape.

From consultation to reform

Technical consultation is an essential part of good tax policymaking, helping to ensure that reforms achieve their objectives without creating unintended consequences. The breadth of the current pipeline also provides an opportunity to address longstanding areas of complexity and modernise both tax rules and their administration.

However, the volume of consultation activity is not itself a measure of progress. The consultation process also needs to operate efficiently, with a clear roadmap that explains the purpose of different engagement mechanisms, where stakeholder input can add the greatest value, and how feedback informs policymaking. The real test will be whether the government uses the evidence gathered to make clear and timely decisions, prioritise and implement reforms in a way that supports growth, investment and compliance without imposing unnecessary complexity. The Autumn Budget should provide greater direction, but longer-term confidence will depend on whether the consultation pipeline ultimately produces a more stable, predictable and modern tax system, not simply more change.

Overview of the key latest ongoing consultations – see our UK Tax Policy Map for a comprehensive overview of the upcoming changes in the UK tax landscape.