HM Revenue and Customs (HMRC) launched its comprehensive Transformation Roadmap on July 21, 2025, signaling a significant overhaul of the UK’s tax and customs system.
This strategic blueprint aims to streamline tax interactions, bolster digital capabilities, and enhance efficiency for millions of taxpayers and agents.
Simultaneously, it specifically targets serious instances of non-compliance, representing a bold stride towards a future where managing tax obligations becomes a more seamless and integrated aspect of daily life and business operations nationwide.
Introduction
HMRC’s fundamental mission involves collecting funds for UK public services, directly supporting government goals for investment, economic growth, and the Prime Minister’s Plan for Change.
Acknowledging substantial shifts in the tax landscape, the government is dedicated to building a future-ready system. The long-term objective is a simpler, more intuitive tax system where interactions, services, and compliance integrate effortlessly.
This vision anticipates routine tax tasks requiring minimal effort, achieved via simplified procedures, advanced AI, and expanded digital self-serve options, making compliance straightforward for most. However, for deliberate evaders, HMRC will take prompt, decisive action.
Key Integrations and Investments
A key element of this transformation involves the Valuation Office Agency (VOA) integration with HMRC by April 2026. This strategic move is expected to enhance flexibility, accelerate change, and yield 5% to 10% in administrative cost savings for the VOA.
Furthermore, this consolidation will improve taxpayer and business experience, aligning with government efforts to reform business rates and modernize the tax system. The government has committed approximately £7 billion annually for foundational investments, while HMRC targets an additional £773 million in efficiencies by 2028-2029.
The three main priorities set forth by the Exchequer Secretary are enhancing customer satisfaction and performance, reducing the tax gap, and promoting modernization and reform of the tax and customs system, all through close collaboration with stakeholders.
Improving Day-to-Day Performance and the Customer Experience
HMRC is actively rolling out more digital self-serve options, empowering customers to manage tax affairs efficiently online or via the HMRC app, thus reducing traditional contact.
In 2024-2025, 19.7 million customers used Personal Tax Accounts digitally, 10 million used Business Tax Accounts, and the app had 6 million active users. The department aims to be digital-first, targeting 90% of interactions digitally by 2029-2030 (up from 76%).
Access tax services digitally via HMRC online. The app and online accounts will be primary contact points, enhanced by AI-powered assistants, voice biometrics, and personalized experiences for simpler tax navigation.
Crucially, digitally excluded or vulnerable customers will continue receiving targeted support and direct adviser access, ensuring Charter standards are met. Contact the HMRC helpline for personalized support.
New and Improved Digital Services
A significant highlight is the new online Pay As You Earn (PAYE) service, designed for approximately 35 million UK taxpayers. Launching in 2025/26, this service will considerably simplify checking and updating income, allowances, reliefs, and expenses via Personal Tax Account or the HMRC app. Easily make payments to HMRC through the gov.uk portal.
By 2028–2029, HMRC expects to save £50 million annually, or about 1,500 full-time nurses, by moving customer conversations to digital. Paper choices will still be available for important letters and those who are not able to use digital devices.
Other initiatives include extending SMS confirmation to self-assessment appeals and PAYE services, improving self-assessment registration, streamlining exit processes for non-filers, and expanding voice biometrics for easier verification.
In order to avoid registering for Self Assessment, a new service will enable working parents who are now responsible for the High Income Child Benefit Charge to pay directly through their tax code. Find comprehensive guidance and tools on the HMRC website.
Enhanced Digital Support for Tax Advisers
HMRC plans close collaboration with tax advisers and professional bodies to enhance agent services. This involves modernizing and mandating tax adviser registration from April 2026 through streamlined processes.
Digital identity verification for advisers and client authorization methods will be updated for efficiency. Secure three-way lines of communication between HMRC, clients, and agents are expected to be in place by 2028.
Key initiatives starting in 2025 include new agent capabilities like digital client withdrawal from self-assessment, expanded income record viewer access, digital tax code impact submissions, and tracking client submissions.
While initial digital service compromises for agents exist, tactical solutions are being implemented until comprehensive new platforms are operational.
Closing the Tax Gap
HMRC has made closing the £46.8 billion tax deficit for 2023–2024 (or 5.3% of potential obligations) a high priority. Substantial investments are being made, including £1.7 billion over four years for 5,500 compliance officers and 2,400 debt management staff.
Additionally, Jim Harra noted a £1.4 billion investment in compliance functions, projected to yield £6.5 billion in extra tax revenues by 2029-30. Efforts are intensifying against wealthy and offshore tax noncompliance, with 400 specialists recruited.
To address the rising tax gap from small businesses, HMRC employs accelerated digitalization, expanded third-party data use, and improved tax advice market standards. New legislation, effective April 2026, will target umbrella companies to combat fraud, making recruitment agencies responsible for PAYE non-compliance.
The launch of an improved informant reward program that ties compensation to tax recovered from significant non-compliance is planned. Finally, updates on modernizing behavioral penalties are planned to incentivize timely payments. File your HMRC self-assessment tax return online.
Reform and Modernisation of the Tax and Customs System
HMRC’s operational framework is undergoing reform and modernization to adapt to the evolving tax and customs landscape. This is crucial for enhancing customer experience and closing the tax gap.
Over the current spending review period, HMRC will comprehensively overhaul its legacy IT infrastructure, investing heavily in AI, robust data capabilities, and new platforms. These investments aim to boost security and efficiency and provide a near real-time picture of tax affairs and compliance risks.
The department will also simplify the tax administration framework by streamlining complex tax rules and adjusting reporting thresholds, such as increasing the income tax self-assessment trading income threshold.
HMRC will actively collaborate with other UK government departments and devolved bodies for data sharing and piloting new processes, including joint AI and digital initiatives like new AI assistants for GOV.UK guidance and a verifiable credentials sharing pilot with U.S.
Customs and Border Protection. Notably, Making Tax Digital for corporation tax will not be introduced; instead, a tailored approach for diverse corporate taxpayers is being developed.
A Future Vision for the Tax and Customs System
The government’s core ambition is a trusted tax and customs system that seamlessly integrates into taxpayers’ daily lives and business operations, leveraging existing customer systems. This transformation of HMRC is a long-term commitment, extending beyond the current spending review.
HMRC will continuously explore emerging innovations in payments and finance infrastructure, including integrated accounting software, to boost efficiency and user experience.
The department plans significant expansion of AI utilization to enhance compliance activity, guide customers, address non-payment, and empower staff. Machine learning and generative AI will streamline administrative tasks like call summaries.
HMRC is still dedicated to using AI responsibly while upholding the Charter’s principles and ethical constraints. In this evolving digital economy, HMRC aims to ensure technological changes genuinely improve customer experience and foster greater compliance, developing future plans in close partnership with stakeholders like tax advisers, software developers, and the banking sector.
Delivery
The transformation methodology is paramount, with the prime minister challenging the civil service for a more productive and agile state, a challenge HMRC embraces.
The Exchequer Secretary, as HMRC Board Chair, has engaged external experts to assure and challenge transformation, emphasizing the benefits of external scrutiny.
HMRC will fundamentally alter its change delivery approach, shifting from long-term, large-scale programs to regular, iterative, user-tested changes. This agile approach will accelerate service improvements, providing immediate customer benefits.
Agents and software developers are among the stakeholders who will be closely consulted during the development of the changes. Additionally, HMRC will coordinate efforts and share best practices with other UK government agencies and devolved entities.
The roadmap includes specific commitments and measurable metrics for transparent progress tracking.
Navigating Service Shortfalls and Future Challenges
Jim Harra, HMRC’s chief executive, candidly addressed a challenging 2024, acknowledging that customer service targets were not consistently met in the first two quarters. This shortfall stemmed from the digital-first strategy not reducing customer contact demand as quickly as planned resource reductions.
However, a revised plan has since improved service levels, putting HMRC on track for its quarter three 2024-25 targets. Harra described delivering government priorities as both “exciting and scary,” given ambitious revenue targets and the significant need to recruit, train, and mentor nearly 5,000 extra compliance colleagues.
The initial 200 new colleagues joined in November, marking the start of this substantial recruitment drive.
ICAS’s Perspective: A Call for Clarity
Jim Harra, HMRC’s chief executive, candidly addressed a challenging 2024, acknowledging that customer service targets were not consistently met in the first two quarters. This shortfall stemmed from the digital-first strategy not reducing customer contact demand as quickly as planned resource reductions.
However, a revised plan has since improved service levels, putting HMRC on track for its quarter three 2024-25 targets. Harra described delivering government priorities as both “exciting and scary,” given ambitious revenue targets and the significant need to recruit, train, and mentor nearly 5,000 extra compliance colleagues.
The initial 200 new colleagues joined in November, marking the start of this substantial recruitment drive.
Conclusion
The HMRC Transformation Roadmap 2025 marks a significant move towards a modern, efficient, and user-friendly tax and customs system for the UK. By prioritizing digital services, leveraging artificial intelligence, and strengthening compliance efforts, HMRC aims to simplify tax obligations for most taxpayers while effectively tackling non-compliance. This ambitious plan, backed by substantial investment and a commitment to continuous improvement and stakeholder collaboration, hinges on transparent delivery and a balanced approach benefiting all taxpayers, including those using traditional support channels.
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