Businesses that built their in-house tax function before 2020 are increasingly finding that the function they have is not the one they need. The tax landscape has changed more in the last four years than in the previous decade — Pillar Two global minimum tax, the non-domicile reform, the inheritance tax changes to pensions and agricultural property, HMRC’s increasing use of digital compliance tools and its growing investigations yield. The in-house tax team that was fit for purpose in 2020 may not be the right team for 2026.

This piece looks at what a properly structured in-house tax function looks like in 2026, what skills are now essential that were optional five years ago, and where most businesses have gaps they have not yet identified.

The Core In-House Tax Function

At businesses with annual revenue above £50 million, the minimum viable in-house tax function in 2026 typically comprises a Head of Tax or Tax Director who owns the group’s overall tax strategy and the relationship with external tax advisers, supported by one or more tax managers covering the relevant disciplines — corporation tax compliance, VAT, employment taxes and, where relevant, transfer pricing and international tax.

Below this level, the tax function is frequently outsourced entirely to the external advisers who prepare the corporation tax returns and VAT returns. This is a legitimate model for smaller businesses, but it carries a risk that is increasingly materialising: the external advisers manage tax compliance reactively, without the business context to identify planning opportunities or compliance risks proactively. As HMRC’s compliance activity increases and the penalty regime for errors becomes more significant, the gap between adequate outsourced compliance and active in-house management is becoming more expensive.

What Has Changed Since 2020

Pillar Two. The OECD’s global minimum tax framework — effective in the UK from 1 January 2024 under the Multinational Top-up Tax — requires UK-headquartered multinational groups with consolidated revenue above €750 million to calculate and pay a top-up tax where their effective tax rate in any jurisdiction falls below 15%. The calculation is complex, the data requirements are significant, and the compliance burden falls squarely on the in-house tax team. Businesses that relied on external advisers for Pillar Two compliance in 2024 are now assessing whether they need dedicated in-house capability. See HMRC Pillar Two guidance for the full compliance framework.

Non-domicile reform. The abolition of the remittance basis for non-UK domiciliaries, effective from 6 April 2025, has created significant planning demand for businesses employing internationally mobile employees and for private client tax practices serving high-net-worth individuals who had previously used the remittance basis. The private client tax market has seen a surge in demand for managers who understand the transitional provisions and the new foreign income and gains regime.

Inheritance tax on pensions and agricultural property. The April 2026 changes bringing most pension funds into IHT scope, and the restriction of agricultural property relief and business property relief to the first £1 million, have created the most significant private client planning opportunity in a generation. Private client tax managers who can advise on pension restructuring, AIM portfolios and agricultural property are in acute short supply relative to demand.

For businesses assessing their in-house tax capability against these developments, the Accountancy Capital Tax Recruitment hub covers the full range of in-house tax appointments from Tax Manager to Tax Director.

The Skills Now Essential in the In-House Tax Team

Technology and data. HMRC’s Making Tax Digital programme is extending to corporation tax. In-house tax teams need members who can work with finance systems — ERP exports, Power BI, Excel at an advanced level — to produce the data HMRC’s digital submissions require. The tax professional who cannot engage with the data layer of their work is increasingly a liability rather than an asset.

Transfer pricing. Any business with cross-border intercompany transactions needs transfer pricing capability, either in-house or through external specialists. The documentation burden under OECD BEPS requirements has increased significantly since 2020, and HMRC’s Large Business directorate devotes more resource to transfer pricing compliance than to almost any other corporate tax area. See the Accountancy Capital Knowledge Centre for a practical guide to transfer pricing basics for finance teams.

Controversy management. HMRC’s compliance yield has been growing steadily, driven by increased enquiry activity across corporation tax, VAT and employment taxes. In-house tax teams with controversy experience — the ability to manage an HMRC enquiry, draft responses to information notices and negotiate settlements — are better positioned to manage the risk than teams who have relied on external advisers for all HMRC interaction.

The Most Common Gaps

The most common gap in the in-house tax functions we assess is the absence of a senior tax professional with the authority and capability to challenge external advisers, make strategic tax decisions independently, and represent the business in HMRC interactions. Many businesses have tax managers who are technically competent at compliance but who do not have the experience or seniority to own the tax strategy.

The second most common gap is international tax capability — transfer pricing, Pillar Two, the tax implications of international expansion — in businesses that have grown internationally faster than their tax team’s capability has kept pace with.

A conversation with a specialist tax recruiter is the most efficient way to assess where a tax function has gaps relative to the complexity of the business it serves. Accountancy Capital Tax Recruitment places in-house tax professionals from Tax Manager to Tax Director across the UK at £65,000 and above.