HM Revenue and Customs has published a sweeping reform plan setting out ambitions for the rest of the decade, including numerous new digital services – as well as “cultural change” across the department.
The HMRC Transformation Roadmap details plans for progress in four main areas: improving day-to-day performance and the overall customer experience; closing the tax gap; reform and modernisation; and a future vision for the tax and customs system.
In his foreword to the roadmap, exchequer secretary to the Treasury James Murray says the document “sets out how we will use the government’s investment to transform the tax and customs system”.
“A transformed tax administration system will be more automated, more focused on self-service, and better set up to get things right first time,” he adds.
“That means closing the tax gap through system-wide changes to policy and practice, using technology to give people more direct control of their tax affairs, and having adaptive and secure IT to underpin our operations.
"Successful transformation also requires cultural change at HMRC. Our approach to changing the way we do things must be agile and iterative, empowering people throughout the organisation to experiment with innovation and embedding a ‘test-and-learn’ approach. We must harness the immense potential of artificial intelligence and adopt best practice from the private sector. As the minister responsible for HMRC, I will challenge the organisation to go further and faster in its transformation.”
However far it travels and however fast it gets there, here are some of the staging posts set out in the roadmap – as well as the intended destination.
Personal tax services
The transformation plan reinforces the target enshrined in the Spending Review that, by the end of this decade, 90% of all interactions with HMRC will be conducted digitally – up from a current tally of 76%.
The roadmap makes clear that, in doing so, the department plans to launch a number of new online services, as well as delivering upgrades to existing platforms.
This includes the delivery of a service for citizens paying income tax and National Insurance via the Pay as You Earn regime. This online offering will provide users “with new self-serve features enabling customers to make changes to reported income, and to verify tax payments, allowances and deductions”.
Alongside this core service will be a new GOV.UK platform “to enable PAYE customers to submit claims for tax relief on their allowable expenses and upload supporting evidence”.
Citizens will also be provided with a new service intended “to make it easier for customers with simple tax affairs to report their taxable income to HMRC”.
Other developments to support PAYE will include enhancements to existing online services covering the provision of “explanations and reassurance messages”, as well as work to “expand and enhance digital options for National Insurance contributions refunds”.
For those filing income tax self-assessment (ITSA) returns, the roadmap reiterates the department’s plan to begin rolling out the Making Tax Digital programme. This extension will, as of April 2026, first encompass ITSA taxpayers with annual income in excess of £50,000. A year later, the threshold will be lowered to £30,000.
Elsewhere, the HMRC transformation plan indicates that the tax agency will make improves to the digital processes for registering or removing oneself from ITSA service, as well as online tools for making appeals against penalties. Other improvements will include shorter processing times achieved via automation and the provision of “enhanced on-screen reassurance messages to reduce the need for progress chasing”.
The self-assessment service will also “introduce HMRC adviser-driven messages that will provide progress updates for customers who have provided digital contact details”.
Claimants of Child Benefit, meanwhile, will shortly be equipped “a claims-tracking service with personalised notifications to remove the need for customers to chase progress”.
HMRC also intends to consider the introduction of digital award notices to replace current paper documents, as well as undertaking work to “explore how Child Benefit and childcare services could be integrated to provide customers with a seamless end-to-end digital service”.
Claimants who also complete ITSA returns will soon find that their annual assessment is pre-populated by HMRC with the relevant Child Benefit data.
The delivery of inheritance tax will be completely transformed, the roadmap pledges.
“HMRC will replace the existing manual, paper-based Inheritance Tax process with a modern end-to-end digital service to improve efficiency and accuracy by 2027-2028,” it says.
Business tax and customs
For its VAT operations, the department has committed to “improve registration processes through a test-and-learn approach, including by exploring sending VAT numbers by email”. The roadmap sets out several further areas for exploration, including examinations of how to boost uptake of e-invoicing, as well as the possibility of “automation options to improve the data-driven de-registration processes” and a potential “repayment tracker”.
To better support the UK’s Corporation Tax regime, the transformation plan enshrines a pledge to “renew HMRC’s legacy Corporation Tax system to ensure its continuing functionality and security”.
In doing so, the department intends to “work with stakeholders to develop key design features of a new Corporation Tax system that caters for the diverse population of users”.
Traders using customs services will benefit from work to “enhance the non-AI elements of the Online Trade Tariff service to provide a more personalised and improved service”, according to the roadmap.
£46.8bn
Tax gap during the 2023-24 year
90%
Target for proportion of interactions to be conducted digital by 2030, up from 76% currently
39 months
Length of time – from June 2021 to October 2024 – that HMRC failed to hit its baseline target for telephone customer service levels
600
Target for number of annual charges for ‘the most harmful fraud’ by 2030, an increase of 20%
250
Number of formal ‘legal gateways’ through which HMRC currently shares data with other e
The tax department also intends to “improve integration across the range of platforms within HMRC’s customs administration, enabling HMRC to better use automation and advanced data processing”, as well as undertaking efforts to “make it easier for customers to submit information to the Goods Vehicle Movement Service and improve the availability of information about goods movements”.
For businesses whose tax affairs are managed by a specialist third-party agent, the roadmap sets out a range of intended additions and upgrades, including the introduction of “a new service to allow agents to digitally submit information which may impact their client’s tax code”.
The department also intends to “provide secure three-way communication between HMRC, its customers and their agents”, as well as committing to “modernise and mandate tax adviser registration from April 2026, with streamlined registration processes”.
Other developments will include “new capabilities to enable agents to digitally withdraw their clients from the self-assessment service”, alongside upgrades that will “provide the ability for agents to track the progress of their client’s submissions and repayments”.
Overall performance and service levels
Alongside the measures focused on individual tax, customs and benefit areas, the roadmap also sets out a variety of “cross-cutting digital improvements” that the department believes will benefit all service users.
This includes a pledge to “modernise communication with customers, increase digital outbound communications and send less post”, while also endeavouring to “expand functionality available in the HMRC app” and “integrate AI to support improved customer service, such as in the ‘Ask HMRC online’ digital assistant”.
Across all its service lines, HMRC intends to “expand the use of progress updates and reassurance messages, as well as secure channels for customers to communicate and exchange information digitally”.
The department will also make better use of “third-party data” to help pre-populate online forms users would otherwise have to complete themselves, the roadmap says.
HMRC’s customer advisers, meanwhile, will also be equipped with better information in order “to enable high-quality support and swifter resolution of customers’ issues”.
All of these tech and data improvements will be complemented by efforts focused on “raising awareness of digital services… [and] improving HMRC’s education offer”, to ensure users are able to get the most out of online tools.
“HMRC uses marketing campaigns to drive awareness and increased use of its digital services including the HMRC app,” the roadmap says. “The majority of campaign activity is delivered through low cost or no cost channels, with paid activity targeted at specific, identified hard to reach groups.
It adds: “In 2025-2026, HMRC will develop education support packages focused on pensioners and small businesses. HMRC will also be developing a Tax Facts module aimed at students in higher education to support the UK’s entrepreneurs of the future.”
The intention to truly become a “digital-first” organisation is centred on achieving three main objectives – which includes ensuring there are non-digital options for” the small population of customers who need them; for example, those who are digitally excluded, have complex tax or customs affairs, or find themselves in vulnerable circumstances”.
For most users, however, “HMRC will provide improved digital services, enabling customers and intermediaries to self-serve online… with accessible, secure end-to-end journeys which makes getting tax right easy with the help of AI, tailored nudges, alerts and pre-populated data”, the roadmap says.
The third objective enshrined in the document is “automating tax where possible”, similar to the operation of the PAYE regime, in which employers’ use of “an online platform provides HMRC with data to enable it to prepopulate tax returns”.
Closing the tax gap
As well as better service levels, the success of HMRC’s transformation plans in the coming years can also be measured by its effectiveness in closing a tax gap that stood at £46.8bn in 2023-24.
The department intends to eat into this figure by using digital and data in service of both “making it as easy as possible” for honest users and their agents to pay the right tax, as well as helping to “deter and prevent deliberate non-compliance, including those who engage in criminality, evasion, and tax avoidance”.
The increased use of automation – such as forms pre-populated with correct user data – will assist in supporting taxpayers to manage their affairs correctly, the roadmap claims.
Better use of information to promote compliance will also include “piloting the use of HMRC and third party data to send intelligent data-driven nudges in digital services”.
The department’s internal systems will also be spruced up, including plans to “enhance case management systems to integrate letters, forms and penalties processing”. This will include a new “automatic document identifier system for HMRC caseworkers to identify fraudulent documents during compliance activities using a biometric likeness-liveness check”. Caseworkers will also be equipped with “generative AI systems that provide rapid, clear and consistent guidance, speeding up casework”.
HMRC plans to tackle fraud include a pledge that, by the end of the decade it will “increase the number of annual charging decisions for the most harmful fraud by 20%, compared to current levels, to 600 per year”, the roadmap says.
Another measure to be rolled out later this year will be “an enhanced reward scheme for informants… targeting information on serious non‑compliance in large corporates, wealthy individuals, offshore and avoidance schemes”.
Reform and modernisation
The roadmap sets out a broader transformation vision for the tax department, the central strand of which will be “modernising HMRC’s IT infrastructure and workforce”.
Also covered by this ambition will be efforts dedicated to “simplifying and modernising the legislative and administrative framework [and] sharing data and collaborating” across government – as well as plans to modernise customer interactions.
An essential part of this activity will be tackling and upgrading the department’s ongoing use of legacy IT systems. This work will see HMRC streamlining its infrastructure, and diversifying its supplier base.
“HMRC is modernising its IT estate, using fewer, more efficient and cost-effective platforms, which will underpin the improvements in customer service set out earlier in this roadmap,” the transformation plan says. “This includes utilising new powers in public procurement legislation to improve the supplier system efficiency and effectiveness including increasing direct use of SMEs and using competitive flexible procedures.”
This modernisation will, in many cases, be gradual – such as in the case of the legacy system underpinning the delivery of corporation tax, where the department will be “making changes… to ensure its continuing functionality and security, as the first step towards a new system which HMRC will work with stakeholders to design”.
Other planned upgrades include the implementation of “modern networks to ensure HMRC remains protected from a multitude of sophisticated cyberattacks”, as well as the department-wide adoption of “a schedule of continuous improvement to build additional features and extract additional benefits from systems”.
HMRC will also increase the use of “testing environments with AI-generated synthetic data to quickly and safely test new AI tools [which] will allow HMRC and the private sector to experiment with AI technology without risking customer data”.
The department hopes to provide staff with a range of new AI tools, including “automated real-time call summaries for telephony advisers” and “internal generative AI chat assistants and agents to provide better access” to guidance and other information.
Microsoft’s Copilot AI assistant will also be rolled out widely.
HMRC plans to support greater data-sharing both internally and externally, including a commitment to “expand and improve access to anonymised data for other government departments and the research community”. The department currently has in place 250 formal ‘legal gateway’ arrangements through which it shares data with other entities.
In the coming months, the department will support the Department for Science, Innovation and Technology in delivering government’s planned National Data Library. HMRC will also advance an ongoing pilot with “US Customs and Border Protection to test the use of new internationally interoperable digital credentials and identity standards”.
The future tax system
The final area covered by the roadmap concerns “some of the longer-term trends that will influence HMRC’s transformation and define future opportunities over this period and beyond”.
Such trends include the growing use of third-party intermediaries – including software companies – in supporting the administration of the UK’s customs and tax system. This goes hand in hand with the greater use of technology – including digital identity and electronic invoicing, as well as AI and automation.
The roadmap states that “HMRC wants to accelerate the benefits of several key trends”.
This includes efforts to capitalise on a trend of “integrating tax and business systems – enabled by the integration of customer systems and innovations in accounting, payments and banking infrastructure”.
The department also wishes to expedite the advantages gained from AI tools that are “increasingly capable of automatically classifying transactions for tax purposes within business accounting systems”.
Open banking models will also provide “new possibilities to help customers manage their tax obligations”.
The roadmap reaches the conclusion that, while the advances of technology and innovation offer huger opportunities, they will also need the department’s careful attention in the coming years.
“HMRC acknowledges this requires an increased stewardship of the wider tax ecosystem,” the document says. “The wider tax and customs ecosystem will be increasingly important in the accurate and efficient collection of tax and customs, presenting new and exciting opportunities and technologies to improve customer experience, close the tax gap and deliver productivity benefits.”