UK businesses are entering 2026 under sustained cost pressure and are expected to focus on stripping out complexity, sharpening value creation and beginning large-scale deployment of agentic AI in tax and finance functions, according to senior executives at Tax Systems.

Executives at the tax technology firm expect leaders to reassess processes, slow recruitment and push harder for efficiency gains, as inflation, tax changes and employment costs continue to weigh on margins.

Cost pressure

Bruce Martin, Chief Executive Officer of Tax Systems, said rising input costs and tax burdens would continue to shape boardroom decisions over the year ahead.

“As we move into 2026, UK businesses will remain under intense cost pressure. Inflation may be easing, but prices are still rising, compounding the pressure of higher national insurance and other increasing employment expenses from 2025. Organisations can’t absorb those pressures indefinitely, so they will continue to shape business decisions, constraining investment and slowing recruitment,” said Bruce Martin, CEO, Tax Systems.

Many finance leaders have already tightened operational and capital budgets over the past two years. Higher interest rates have increased the cost of borrowing. Wage pressure has added to operating expenses. Tax policy shifts, including national insurance changes, have increased the fixed cost base for employers.

Process reset

Martin said companies would reassess which activities genuinely contribute to value creation. He linked long-term growth with clearer prioritisation and simplification of internal structures.

“In this economic environment, businesses will need a sharper view of what genuinely creates value. After years of layering new policies and processes onto existing structures, many organisations are left with a knot of complexity that’s expensive to run and difficult to change. In this case, a reset is good business hygiene, and the most effective leaders will take a more disciplined look at which processes are essential and which can be removed altogether,” said Martin.

Large organisations have accumulated multiple overlapping systems, approvals and compliance steps across finance, tax and back-office functions. This has created administrative overheads and slower change cycles.

Many boards are now reviewing non-core activities and legacy workflows. They are also assessing which functions can be simplified, centralised or supported by software.

Tools and investment

Martin drew a link between simplification and targeted investment in technology. He contrasted current toolsets in many back-office teams with their rising workload and accountability.

“Once that focus is established, business leaders must ensure that they are equipping their teams with the right tools. You wouldn’t send a construction worker to dig a hole with a teaspoon; yet we routinely do the equivalent in back-office functions by asking people to deliver more with outdated systems and manual workarounds. 2026 should be the year that organisations address that gap and make the investments needed to drive efficiencies. AI will be pivotal in this regard, enabling organisations to do more with less as budgets tighten. Importantly, however, it isn’t all about speed. The real opportunity with modern technology, particularly AI, is the ability to do things that simply weren’t possible before, unlocking new insights, new ways of working, and fresh avenues for innovation,” said Martin.

Companies across sectors are evaluating automation initiatives and AI products in finance, tax and compliance. Many are targeting repetitive activities such as data entry, reconciliations and reporting preparation.

Martin said he expected a divide between organisations that upgrade tooling and those that retain manual workarounds. This would affect the speed and confidence of financial decision-making.

“In a year defined by cost pressure, organisations that streamline how they operate and equip their people with genuinely effective tools will be best positioned to make confident decisions and move forward with intent,” said Martin.

Agentic AI shift

Tax Systems’ Chief Innovation Officer, Russell Gammon, said the coming year would mark a transition in tax from AI trials to operational use of so-called agentic AI. This approach uses software agents that can take actions within workflows rather than only generating outputs on request.

“Agentic AI will be one of the most significant shifts in tax over the next year as we start to see more meaningful applications of the technology. We are moving beyond experimentation to genuinely useful and practical deployments of AI agents into workflows to solve real problems. We also expect to see regulatory bodies, including HMRC, release guidance on the technology’s use, which will be critical in giving organisations the confidence to move forward, particularly in regulated and risk-sensitive areas like tax,” said Russell Gammon, Chief Innovation Officer, Tax Systems.

Finance and tax teams have run pilots with generative AI for data analysis and documentation. Gammon said the next phase would embed agents more deeply into standard processes.

Low-risk use cases

Gammon expects early deployments in low-risk activities. These would sit within existing controls and oversight structures.

“In the early stages, agents will be deployed in low-risk use cases where trust can be built gradually. Data is one area in particular where agents can add immediate value, freeing up significant amounts of time spent on input and number crunching without disrupting existing controls. As confidence grows, those same agents will start to take on more tasks and responsibilities. One area with significant potential is the review process. Agentic AI can support first and second-level reviews, flagging anomalies, highlighting risks and preparing summaries, which will save a significant amount of time for senior leaders, whose capacity is both limited and extremely valuable,” said Gammon.

Tax teams handle large volumes of structured and semi-structured data across corporate entities, jurisdictions and reporting regimes. Automation of data handling and first-level review stands to reduce manual checks and standardise documentation.

Gammon said he expects guidance from regulators and tax authorities on acceptable uses of AI in tax. This would cover documentation, oversight and accountability.

Scaling change

Gammon said he anticipates wider deployment of agentic AI across tax functions through 2026. He expects these tools to support standard workflows alongside human review.

“There are many opportunities for tax processes to be made more efficient and in 2026, we’ll start to see those changes play out at scale, with agentic AI becoming a core part of how tax functions operate,” said Gammon.