HM Revenue and Customs will get £1.7bn over the next four years to fund 5,500 extra compliance and 2,400 extra debt management staff.
The funds were announced in yesterday’s Spending Review, where HMRC was also given £500m to invest in digital services over the same period “to make HMRC a truly digital-first organisation”.
The Red Book, which breaks down the SR25 spending commitments, says the £1.7bn investment in compliance and debt management officials will enable HMRC to raise £7.5bn a year in extra tax by 2029-30, enabling it “to close the tax gap and fund public services”.
“Unpaid tax deprives UK public services of vital funding and puts businesses who pay the right tax at a competitive disadvantage,” the Spending Review document says.
This funding for extra staff follows similar, but smaller, spending boosts for the department in the last two fiscal events. HMRC was given funding for an extra 600 debt management staff in the Autumn Budget, alongside cash for 180 more officials who will focus on fraud and error in welfare payments. In the Spring Statement, the department received funding for an extra 500 compliance officers.
The £500m investment in digital services aims to help the department reach a target for a minimum of 90% of customer interactions being digital self-serve by 2029-30, up from around 70% in 2025. It includes £298m from the government's £3.25bn Transformation Fund to reform public services.
“This will improve services so people can easily and quickly get the information they need without having to call or write to HMRC,” the Red Book says.
The digital services cash injection will also “enable the use of AI to help taxpayers with their enquiries and to raise productivity within HMRC”, the document says.
The Red Book also says HMRC will eliminate all outbound post, with limited exceptions such as letters which generate revenue for the Exchequer, reducing the number of letters HMRC sends by 75% and saving £50m a year by 2028‑29.
“The government will continue to ensure that alternative channels, including phonelines, are still there for those who need them,” it adds.
The boosts come amid a mixed picture for budget growth in HMRC.
Its day-to-day budget will grow by 1.8% in real terms over the SR period. The Red Book says this settlement “reflects the importance of HMRC in collecting tax revenue to fund vital public services, and all five of the government’s missions in the Prime Minister’s Plan for Change”.
However, its capital budget will reduce by 15.3% in real terms.
HMRC has also found some of the biggest efficiency savings for this SR. It is planning to reduce its admin budget by 17% by 2029-20, the joint highest among central government departments, and it has identified day-to-day efficiency savings of 13.1% over the next four years.