Future of Tax - Q1 2026

Future of Tax

“HMRC is helping customers reduce errors and stay compliant.”

Jonathan Athow, Director General, Customer Strategy and Tax Design , HMRC Page 02

“Accessible digital communication would help taxpayers and their agents engage with the system more confidently.”

Emma Rawson, Director, Public Policy, Association of Taxation Technicians Page 07

“UK leaders remain committed to expanding internationally despite an increasingly complex global landscape.”

Forvis Mazars

Pages 04-05

Simplifying tax for SMEs: a smarter, more digital future

HM Revenue and Customs (HMRC) is committed to modernising the tax system for individuals and businesses by delivering a digital-first service to transform how customers manage tax obligations.

HMRC’s Transformation Roadmap explains how we’re modernising the tax system, helping customers get their tax right the first time, therefore closing the tax gap. New services support business and individual tax compliance and boost public finances.

MTD: a new service to help get tax right Making Tax Digital (MTD) is essential to this transformation, helping keep accurate records and managing tax more efficiently using compatible software.

From 6 April 2026, sole traders and landlords with an annual income of more than £50,000 from self-employment and property will begin using MTD for Income Tax, with phased expansion thereafter. Customers will keep digital records and send quarterly updates to HMRC through secure software, making it simpler to check and submit an annual tax return using the software. This digital-first approach improves recordkeeping, helps businesses and individuals understand their realtime tax position and makes finances easier to manage. MTD helps customers pay the right amount at the right time, supporting HMRC to reduce the tax gap.

Your tax information on the HMRC app

The HMRC app makes tax clearer and more accessible for customers. Free to download on iOS and Android, giving individuals and businesses a secure, straightforward way

to manage their tax affairs digitally.

People can quickly check how much tax they owe, make secure digital payments, set reminders, track submissions, view their tax code, National Insurance number, Unique Taxpayer Reference (UTR) and use tools like the tax calculator.

With fast, secure sign-in by PIN, fingerprint or facial recognition, the app makes it simpler to stay on top of tax responsibilities, avoid mistakes and reduce the risk of missed deadlines.

By making tax information and secure digital payments easier, HMRC is helping customers reduce errors and stay compliant. This supports stronger financial management across the UK’s small business community, ensuring people pay what they owe when they owe it. This helps HMRC reduce the tax gap and funds essential services like schools and policing.

How digital payments are changing tax systems

As payments become increasingly digital, the systems that support taxation, compliance and financial transparency are evolving alongside them.

The payments ecosystem has evolved in the past decade. Digital wallets, realtime payment systems and open banking changed how we pay, pushing towards faster, more data-rich transactions.

Digital payments shift

For businesses, this transformation has brought more structured transaction data, leading to more accurate financial reporting, better cash flow management and more robust compliance processes.

With governments and regulators pursuing greater financial transparency, the growth of digitalisation in payments means that transaction records become clearer and more reliable.

Globally, real-time payment networks are growing swiftly. Fund transfer time is cut from days to seconds, improving efficiency for businesses and consumers.

Despite these benefits, instant settlement has introduced new compliance, fraud detection and oversight challenges. As payment speeds increase, organisations must ensure that monitoring and verification processes evolve simultaneously.

With the increasing deployment of advanced analytics and AI, financial institutions and payment providers can now more effectively analyse transactions and detect suspicious activity earlier.

Data-driven compliance

The future of payments is data-driven. Automated financial processes are increasingly

commonplace, from reconciliation and reporting to fraud monitoring and compliance.

For tax systems, this is significant. As digital payment infrastructure becomes widespread, governments are afforded greater insight into economic activity. Likewise, businesses benefit from clearer audit trails and financial reporting processes.

The future of payments, therefore, reflects not only technological advancement but also a fundamental structural shift in how financial systems function.

Looking ahead

Innovation in payments will no doubt continue, making payments infrastructure, financial reporting and regulatory oversight more interconnected. Across the industry, organisations are increasingly exploring how digital payment systems, real-time infrastructure and data-driven technologies can improve financial processes, including transparency, operational efficiency and compliance.

Together, these developments highlight how digitalisation is reshaping the payments landscape. With the development of new technology and business models, collaboration between financial institutions, fintech companies, regulators and policymakers will be crucial to how these developments unfold.

As payments continue to evolve, industry dialogue will remain essential in shaping how new technologies develop and integrate into the broader payments industry.

Why data-ready tax teams drive global growth

UK businesses are entering a period where tax strategy and data readiness are becoming inseparable.

Forvis Mazars’ UK C-suite barometer 2026 shows that UK businesses are pushing ahead internationally despite a volatile global landscape.

Of those surveyed, 60% have added new target countries to their expansion plans, yet one of their biggest barriers is managing compliance with local laws, regulations and taxes. This shift is placing tax compliance at the heart of strategic decisionmaking, with a growing need to interpret complex rules across multiple jurisdictions to support confident international growth.

The report also highlights that businesses expanding into markets such as the US, France and Canada are investing in high-quality, consistent data to strengthen reporting, understand tax exposure and support global mobility. Organisations that can access accurate information quickly are best placed to navigate global uncertainty and seize new opportunities.

How UK businesses are reassessing expansion plans in a volatile world

Despite a more cautious climate for international expansion, UK firms remain ambitious and continue to look for opportunities to grow in new markets.

There’s no denying we live in an uncertain and volatile world, so it’s no wonder UK firms with international expansion ambitions are reassessing their plans.

However, that’s only half the story, according to professional services firm Forvis Mazars. Because while UK businesses are revising their approach to overseas growth, they’re not scaling back. In fact, 51% are adding extra target countries for expansion.1

The findings, published in Forvis Mazars’ UK C-suite barometer 2026, revealed that 32% cited ‘national or international political tension/ instability’ as one of their biggest challenges in setting up operations in new countries.1 Yet the top expansion challenge remains ‘managing compliance with local laws, regulatory requirements and taxes.’

US remains the biggest target for UK business expansion

“Large groups were already reassessing their global compliance and reporting capabilities following the introduction of the OECD’s global minimum Pillar Two tax rules,” explains Catherine Hall, International Tax Partner at Forvis Mazars in the UK.

“That is overlaid with ongoing changes to the definition of what constitutes a permanent establishment, for example, when corporate tax liabilities are triggered in a country. Now geopolitical uncertainties have

added an extra layer of complexity.”

If you’re a UK company looking to expand internationally, assess the changing landscape and filing requirements of any new jurisdiction and have a three-to-five-year business strategy in place.

One of these geopolitical uncertainties is the unpredictable nature of the US tariff landscape, with firms acknowledging ‘costs and/or operational issues due to trade and tariff changes’ as a challenge to international expansion. Still, the US remains the biggest expansion target among UK businesses. Hall thinks this is partly because, in a post-Brexit world, businesses are seeking opportunities in non-EU countries. They also see tariffs as just one more complication in an already difficult-to-negotiate US landscape of federal, state and local taxes; plus they recognise the wider benefits of relocating to the US. “It presents a huge market of opportunity,” she says. “And from a cultural and a language perspective, UK businesses in particular find it to be an easier point of entry.”

New countries feature in expansion plans

The Forvis Mazars barometer also reveals that UK businesses have a broad range of new countries in their expansion sights: most notably, France, Canada, Germany, Australia and China. “Asia Pacific has always been an area of interest, but, generally, it’s been harder for UK businesses to break into,” says Hall. “China, like the US, has huge market potential, which is why it’s still thought of as a desirable location for business expansion. And, of course, it provides access to the wider Asia Pacific region.

In France and Germany, we’ve seen economic shifts that might break up some domestic markets in those locations and, where there’s change, there’s always opportunity, and UK businesses have been pretty quick to respond and adapt.”

Hall believes this flexibility can be partly explained by Brexit. “In some ways, it’s made businesses more cautious, because they know that adapting to change can be an additional burden, particularly for a growing business,” she says. “It takes a lot of time and resources, and it adds complexity to their operations. On the other hand, because they’ve already been through Brexit, they may have improved internal processes that help them deal with changes in other jurisdictions.”

If you’re a UK company looking to expand internationally, Hall’s advice is to assess the changing landscape and filing requirements of any new jurisdiction and have a three-to-fiveyear business strategy in place.

“At the root, clients should focus on having good quality data in a standard format, then ensure they have the people, processes and technology in place for filing. Getting that ‘front end’ sorted first will make it easier to manage reporting changes in new markets.”

Reference: 1. Forvis Mazars. (2026). Adapting in uncertainty — C-suite barometer: outlook 2026. https://bit.ly/4sk5aaC.

Why ‘global mobility’ is easy on paperbut never simple in practice

UK businesses expanding into new geographies must be ready to deal with several complex challenges. That includes the movement of their most important resource: their staff.

We live in an international world where many UK businesses are expanding into new territories.

Any company sending employees overseas to support this expansion knows that global mobility is never easy, with a myriad of ever-changing in-country requirements to consider. This is reflected in Forvis Mazars’ UK C-suite barometer 2026, where compliance with local laws, regulations and taxes is named as the number one international expansion challenge for UK businesses.1

“Immigration is top of the agenda in the geopolitical environment right now, particularly in countries like the US,” says Raj Bhundia, Tax Partner, Global Employer Services at Forvis Mazars in the UK. “It’s not as straightforward as upping sticks, going to another country and working. Relocation may require a 6-to-12-month lead time, and it can be very expensive.”

When opening a location in a new geography, senior UK staff will need to relocate first, establish and grow the business, hire locally and start to embed the wider corporate culture. Therefore, a key question leadership must ask is, ‘What do our people really think about the overseas territory we’re expanding into? Is it somewhere they actually want to be?’

International moves that make financial sense for employees If a company is expanding to a place that isn’t attractive or exciting, for example, if schools and infrastructure are poor and the cost of living is high, it’s likely staff won’t want to stay there permanently. Instead, employees charged with setting up an overseas location might prefer to travel back and forth regularly. But beware, says Bhundia, that creates complexity around immigration, social security and tax.

Any employees relocating will also want assurance that the move will be financially beneficial. That can sometimes be difficult to ascertain, particularly in a country such as the

US with its federal, state and local tax laws.

“Tax is a personal issue for people, based on where they are in their lives,” says Bhundia. Any relocating employee will want to know, “What’s my tax liability going to be? How does that equate to what I was paying in the UK? And how is the business going to help me through this process?”

How geopolitical tensions are shaping corporate mobility strategies

It goes without saying that, in today’s volatile world, geopolitical tensions play a huge part in cross-border mobility planning. “At the employee level, staff will want to know: is this a country I’ll feel safe and thrive in?” says Bhundia.

Executives should be clear about which countries they’re targeting and those they want to avoid. “For example, if a business is going into China, what will happen to its Intellectual Property (IP)?” asks Bhundia. “Is it going to be safe? Will it be able to share data? So, there are those challenges to consider.”

And, currently, tariffs are adding a further layer of uncertainty. “A business has to look at the costs it will incur through tariffs,” agrees Bhundia. “But the world is changing constantly, particularly with the US. One day something is happening, the next it’s scrapped and something else is brought in.”

In a world of increasing borders and restrictions, companies need to be adaptable. UK businesses expanding into economically diverse regions must be constantly creative in how they get their most important resource, their staff, into position. They should also be data-ready to handle the tax, payroll and audit demands of different jurisdictions.

Reference: 1. Forvis Mazars. (2026). Adapting in uncertainty — C-suite barometer: outlook 2026. https://bit.ly/4sk5aaC.

Top three challenges of international growth

Rethinking tax support for entrepreneurs

As the Government reviews tax support for entrepreneurs, attention is turning to investment incentives. But the tax environment for starting and growing a business also deserves scrutiny.

The UK’s tax system contains targeted reliefs designed to encourage investment in businesses. Schemes such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme have helped channel funding into start-ups and early-stage companies.

Yet focusing solely on investor incentives risks overlooking the wider tax landscape facing entrepreneurs. From administrative complexity to poorly targeted reliefs, there remain structural challenges that can shape business decisions and access to capital.

Simplification, where possible, would help reduce barriers and make support more accessible to the full range of UK entrepreneurs.

Complexity and accessibility

Many reliefs involve detailed rules and technical conditions that can be difficult for smaller businesses. Accessing them often requires specialist advice, which may be costly or out of reach for some founders.

Administrative requirements can also be unforgiving. In some cases, relatively minor technical errors may jeopardise reliefs that investors and businesses expected to receive. A

more proportionate approach to compliance could help ensure the policy objectives of these schemes are realised in practice.

Simplification, where possible, would help reduce barriers and make support more accessible to the full range of UK entrepreneurs.

Targeting incentives effectively

There’s also an opportunity to review whether existing reliefs remain aligned with policy goals. For example, Business Asset Disposal Relief has become more limited in scope over time, raising questions about how effectively it now supports entrepreneurial activity.

Future reforms might consider how the tax system can better encourage reinvestment, the retirement needs of business owners and longterm growth and scaling within the UK economy, rather than focusing primarily on the point at which a business is sold.

Ultimately, supporting entrepreneurship requires a system that works across the whole life cycle — from start-up and early growth to expansion and exit. This involves more than just the tax system.

The current review presents an opportunity to step back and consider how the tax framework and other regulatory and compliance-related requirements can provide clarity, stability and simplicity for entrepreneurs. Achieving that balance will be key to ensuring the UK remains an attractive place to start and grow a business.

WRITTEN BY Pete Miller

How digital channels can improve tax engagement

Improving public understanding and experiences of the tax system is important. As HMRC expands its digital services, communication tools should help taxpayers access information and support more easily.

Better communication channels play an important role not only in resolving queries, but also in improving taxpayers’ understanding of their obligations and entitlements.

Accessible digital communication would help taxpayers and their agents engage with the system more confidently, encouraging greater awareness of their tax liabilities and obligations.

The case for secure messaging

A secure online messaging channel would allow taxpayers and agents to communicate with HMRC at any time, without relying on postal correspondence or lengthy phone calls.

Digital channels such as webchat and secure messaging portals can enable faster exchanges of information than traditional methods. HMRC already provides webchat support for some services, but this is typically limited to straightforward queries, and although it’s possible to download a chat transcript, it doesn’t provide a permanently available communication record. A dedicated messaging portal would allow users to raise queries, submit information and follow up on ongoing issues within a single secure platform.

Efficiency and transparency

Digital communication can also improve efficiency. Reducing reliance on postal and call centre correspondence would lower administrative costs

for HMRC, freeing up staff time to focus on more complex matters, while a messaging platform would also create a clear record of interactions between HMRC and taxpayers or their agents.

Designing a workable system

Any new digital channel would need to route queries to the appropriate HMRC teams. Following this, ongoing communication should be able to take place directly with the relevant caseworker without repeating the triage process.

At a minimum, a secure portal allowing taxpayers and agents to upload documents would provide an immediate improvement, helping ensure queries are resolved more quickly and accurately.

Making communication truly digital

A fully functional, two-way digital communication system for taxpayers and their agents would represent an important step toward a more accessible tax administration system — one that helps people engage with, and better understand, their tax affairs.

forvismazars.com/uk

~Benjamin