HMRC have published their Transformation Roadmap for the future tax and customs system. The aim is to create a modern tax system that supports public finances while reducing the administrative burden on taxpayers.
James Murray, Exchequer Secretary to the Treasury, set out three priorities for HMRC to achieve their aim of creating a simplified tax system:
- Improving day-to-day performance and taxpayer experience.
- Closing the tax gap.
- Reforming and modernising tax and customs administration.
Improving day-to-day performance and the taxpayer experience
HMRC have seen an increase in digital engagement. In 2024-25:
- 19.7 million taxpayers used their personal tax account.
- 10 million taxpayers used their business tax account.
- The HMRC app had around 6 million users and ranks among the UK's top five finance apps.
HMRC are working towards becoming a digital-first organisation, intending to have 90% of taxpayer interactions being digital by 2029-30. This is currently at 76%.
- This will reduce pressure on HMRC's phone and postal services and free advisers to support those who are digitally excluded, vulnerable or those with complex tax affairs.
- New functionality and features will be added to HMRC online and the HMRC app.
- This will include AI-powered assistants, voice biometrics and personalised digital experiences.
- A more straightforward and secure login process will be introduced.
Planned improvements for 2025-26:
- A new PAYE online service, giving PAYE taxpayers direct access and control over their tax position.
- Taxpayers will be able to notify HMRC of income changes, check allowances or deductions, and ensure they are paying the correct amount of tax.
- A new expenses service for PAYE taxpayers to submit claims for tax relief on allowable expenses and upload supporting evidence all in one place.
- Easier Self Assessment registration and deregistration process.
- Child Benefit reporting through tax codes, removing the need for Self Assessment, for newly liable, employed individuals.
Longer-term improvements:
- From April 2026, the pre-populating of Self Assessment tax returns with Child Benefit data.
- From 2027-28, digitising the Inheritance Tax service.
- Simplifying payments and refunds, including direct bank repayments and easier National Insurance contribution refunds.
- Single Customer Account Programme to provide a unified view of the taxpayer's overall income and tax position in their digital account.
- From 2027-28, a new AI service for the Online Trade Tariff to provide bespoke support to importers or exporters.
Agent online services
HMRC plans to improve the registration service for tax advisers and invest in order to:
- Modernise digital identity for tax advisers.
- Improve how tax advisers are authorised by their clients.
- Provide secure three-way communications between HMRC, taxpayers and agents.
Starting in 2025, HMRC will work to prioritise:
- Allowing agents to digitally withdraw their clients from Self Assessment.
- Enhancing the income record viewer with more client data.
- Launching a service for agents to submit information affecting their clients' tax codes.
- Enabling agents to track progress of submissions and repayments.
From 2026-27:
- HMRC will build modern, secure digital platforms to improve agent and taxpayer experiences.
- Existing services will be migrated to these platforms, with agent access integrated.
- Final service design will depend on permissions and ongoing collaboration with the agent community.
Closing the tax gap
Based on the most recent data from 2023-24, the UK tax gap is at 5.3%.
- HMRC are investing in people, services, standards and technology to improve compliance and recover owed revenue.
- AI and third-party data are going to be used to improve identification of compliance risks:
- Pre-population of tax returns will reduce errors.
- The data used for PAYE tax codes and simple assessments will be improved.
- Automatic registration of taxpayers will bring hidden income into the system.
- AI analytical tools will provide automated reminders to taxpayers to pay the tax they owe through Self Assessment from 2026-27.
- HMRC are piloting this for Corporation Tax.
HMRC are expanding their workforce to assist with these aims:
- 5,500 new compliance officers will be trained and equipped to detect non-compliance.
- 2,400 new debt management officers will focus on recovering debts, particularly from those who have the means to pay but choose not to.
- New processes will also be put in place to automate the collection of lower-value debts.
- Recruiting specialists to investigate high-risk cases and collaborate internationally to address offshore tax evasion and enablers, such as agents, accountants and lawyers.
- HMRC will launch an enhanced reward scheme for informants of non-compliance in late 2025.
- Focusing on large corporates, wealthy individuals, offshore and avoidance schemes.
- Expansion of their counter-fraud capability to increase annual charging decisions for serious fraud by 20% to 600 per year by 2029-30.
HMRC are taking a multi-faceted approach to address the small business tax gap through digitalisation, use of third-party data and improving standards in the tax advice market.
- From April 2026, tax advisers will be required to register with HMRC through a secure process, improving HMRC's oversight.
By the end of 2028, HMRC investment plans include:
- Digital Disclosure Service for correcting errors and paying liabilities and penalties.
- Automatic document identifier using biometric checks to detect fraud.
- Secure three-way communication between HMRC, taxpayers and agents.
- AI-powered caseworker tools using Generative AI for faster, clearer and consistent guidance.
Reform and modernisation of the tax and customs system
HMRC are reforming their operations to better adapt to future changes in tax and customs.
- Over the current spending review period, HMRC will replace their legacy IT systems and invest in AI, data capabilities, and modern platforms.
- This will improve operational security and efficiency, whilst enabling a more real-time view of taxpayers' tax positions and compliance risks.
HMRC will also simplify tax rules and reporting thresholds to make it easier for taxpayers to understand and meet their obligations.
- Simplification measures already announced:
- Self Assessment reporting threshold raised from £1,000 to £3,000. A new digital reporting service will be introduced for those below the threshold.
- The customs Temporary Admission procedure will be simplified from 2025 with extended time limits and fewer restrictions on eligibility and usage.
- HMRC are operating a pilot in Autumn 2025 to test how their systems can process digital trade documents.
- Mandatory payrolling of benefits from 6 April 2027.
- Future administrative reforms:
- New legislation will require taxpayers to provide digital contact details when using HMRC's digital services.
- HMRC will publish their consultation response document later in 2025 to set the standards for the format, frequency and timeliness of third-party data reporting.
- Ongoing consultation on the effectiveness and administration of behavioural penalties and increasing late payment penalties for VAT and Income Tax. Update expected later in 2025. See Consultation: Reform of Behavioural Penalties.
- Exploring improvements to the alternative dispute resolution and statutory review processes, which aim to simplify and speed up tax appeals. HMRC will provide an update on the consultation in Autumn 2025. See Consultation on improving HMRC's approach to dispute resolution.
- HMRC is considering the reform of revenue correction powers.
HMRC will work with other UK government departments and devolved bodies to share data and trial new processes.
- This includes joint AI and digital initiatives, such as developing AI-powered assistants for HMRC guidance and launching a credentials sharing pilot with U.S. Customs and Border Protection.
Making Tax Digital (MTD)
MTD for Income Tax:
- Businesses and landlords will report income and expenses closer to real time, reducing errors.
- Provides a clearer, more regular view of tax liabilities, aiding financial planning.
- Taxpayers can use tailored Commercial software that integrates with their business processes.
- Software will offer data-driven nudges and allow multiple agent authorisations.
- See Making Tax Digital.
There is currently no MTD for Corporation Tax planned, but a tailored approach will be developed.
A future vision for the tax and customs system
The government aims for a trusted tax and customs system that integrates seamlessly into the daily lives and operations of taxpayers, leveraging the tools and platforms they already use.
- To achieve this, HMRC's transformation will extend beyond the current spending review period.
- HMRC is exploring new technologies in payments and financial infrastructure, including improvements to accounting software that integrate with taxpayers' existing systems.
HMRC plans to expand their use of AI to strengthen compliance efforts, guide taxpayers to accurate advice, follow up with those who have not paid and support staff in working more efficiently.
- Applications of machine learning and generative AI are already streamlining administrative tasks.
- These technologies will continue to be adopted responsibly, in line with HMRC's ethical and safety standards, government frameworks, and the HMRC Charter standards.
- As the digital economy becomes more interconnected and automated, HMRC recognises that taxpayers, agents, accountants and lawyers are also embracing new technologies.
- HMRC are committed to ensuring these changes enhance both taxpayer experience and compliance.
HMRC will work closely with key stakeholders, including tax advisers, software developers, and the banking and payments sector, to shape future plans and address potential challenges.
Delivery framework
HMRC are adopting a modern, agile delivery model inspired by private sector best practices and aligned with the Prime Minister's vision to deliver a more productive Civil Service.
- The Exchequer Secretary chairs HMRC's board, providing direct ministerial leadership.
- Moving away from large, long-term programmes, speeding up approvals and modernising the supplier landscape.
- Bringing in taxpayer, stakeholder and private sector expertise to shape policy, change and operations.
- Making changes to be more taxpayer-focused and efficient.
- Appointment of a Chief Customer Officer.
- Integration of the Valuation Office Agency to strengthen ministerial accountability.
- Appointment of a digital deliver partner to support, coach and accelerate HMRC's transformation agenda.
- Ongoing review to ensure HMRC's fees provide value for money and incentivise positive behaviours and economic outcomes.
This approach enables faster deployment of service improvements, allowing taxpayers to gain more immediate benefits.
- Changes will be developed and delivered in greater consultation with stakeholders, including agents and software developers.
- HMRC will also work with other UK government departments and devolved bodies on similar work and share best practice.
Progress will be transparently tracked against defined commitments and performance metrics.
External links
Press release: New HMRC service announced for workers to take control of their tax affairs