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      At the Spending Review in June 2025, the Government announced investment of £7 billion per year in HMRC to help achieve their strategic priorities of:

      • Improving day-to-day performance and the customer experience;
      • Closing the tax gap; and
      • Reforming and modernising tax and customs administration.

      On 21 July 2025, HMRC published their Transformation Roadmap, setting out how that investment will be used to achieve each of these objectives. The Government’s vision is for everyday tax and customs tasks to happen with minimal effort, via simplification of tax processes, the application of new technologies such as artificial intelligence (AI) and more digital ‘self-serve’ options for customers.


      Sharon Baynham

      Director, Tax Policy

      KPMG in the UK

      The Roadmap outlines the Government’s ambitious digitalisation agenda and drills into more granular detail on what practical changes taxpayers and advisors can expect to see in the next few years and beyond.

      Some of these changes were given the high profile one might expect in accompanying press releases – such as the roll out in 2025/2026 of a new online service for 35 million PAYE taxpayers, enabling them to take more control over their tax affairs. However other significant announcements – in particular confirmation that Making Tax Digital (MTD) for Corporation Tax has been abandoned – were buried in the detail of the document.

      This article summarises some of the key features of the Roadmap, but readers can also refer to a full list of digital improvements aiming to enhance the customer experience, split by tax area, that was published as an annex to the Roadmap

      Improving day-to-day performance and the customer experience

      A key focus of the Roadmap is improving day-to-day performance and the customer experience. HMRC are designing and delivering more digital self-serve options for customers, enabling them to have greater control over their tax affairs, completing routine tasks online or in the HMRC App. The ambition is that a minimum of 90 percent of interactions will be undertaken digitally by 2029/2030 (up from 76 percent currently).

      To facilitate this, the HMRC app and online tax accounts will receive new functionality, including AI-powered technology, reducing the need for customers to speak to an HMRC adviser. HMRC will also reduce their reliance on paper correspondence. The Roadmap reiterates that adviser-led support and paper communications will remain for certain taxpayers, including the digitally excluded, those with complex affairs or those in vulnerable circumstances.

      Examples of changes that individuals, small businesses and agents can expect to see in 2025/26 include:

      The roll out of a new online service for all 35 million PAYE taxpayers, giving them direct access and control over their tax position, with enhanced and expanded digital features for people to notify HMRC of income changes, check allowances or deductions, and ensure they are paying the correct amount of tax;

      • The launch of a new expenses service to enable PAYE customers to submit claims for tax relief on their allowable expenses and upload supporting evidence all in one place;
      • Improved self-assessment registration (as well as a streamlining of the exit process for those who no longer need to file a tax return); and
      • The ability for newly liable, employed individuals to report Child Benefit payments through their tax code, potentially negating the need to file a tax return for many.

      Beyond 2025-2026 HMRC will continue to enhance their services, including by:

      • Pre-populating Self-Assessment tax returns with Child Benefit data from April 2026 for those not reporting payments through their tax code;
      • Digitalising the Inheritance Tax service from tax year 2027/2028 onwards;
      • Making payments more efficient, accessible and simpler for customers, for example, by enabling more customers to receive repayments directly into their bank accounts; and
      • Developing a new AI service for the Online Trade Tariff to provide bespoke support to importers and exporters.

      Closing the tax gap

      The UK tax gap stands at 5.3 percent (or £46.8 million) based on the most recent data from 2023 to 2024 and the Government is determined to reduce it. The Roadmap acknowledges that the vast majority of customers try to get their tax right, but states there has been an increase in cases where taxpayers deliberately under-report or hide their income.

      HMRC intend to modernise how they collect, process and exploit data to promote compliance, for example, through improving the use of third-party data to pre-populate tax returns.

      The Roadmap notes that the Government is also making legislative changes to crack down on tax avoidance and prevent non-compliance. This includes the publication of draft legislation to tackle PAYE non-compliance in relation to umbrella companies which is covered in a separate article.

      The Roadmap points to previously announced measures to tackle the tax gap, including additional investment in compliance and debt management officers, as well as officers to focus on high-risk cases and stronger measures to counteract offshore evasion and ‘phoenixism’.

      Reform and modernisation of the tax and customs system

      The Roadmap sets out four areas where HMRC intend to reform and modernise the infrastructure of tax and customs administration:

      Modernising their infrastructure and workforce

      HMRC will modernise their IT estate by using fewer, more efficient and cost-effective platforms. They will also make changes to their legacy corporation tax system to ensure its continuing functionality and security, as the first step towards a new system which HMRC will work with stakeholders to design.

      HMRC have also established a digital academy to ensure their workforce adapts to changing roles and skills, including the ability to use AI effectively.

      Modernising how customers interact with HMRC

      The Roadmap discusses the role of MTD for VAT and Income Tax to improve the customer experience and close the tax gap. Readers will be particularly interested in the Roadmap’s statement that HMRC do not intend to introduce MTD for Corporation Tax (CT). Instead, they will develop, in consultation with stakeholders, an approach to the future administration of CT that is suited to the varying needs of the diverse CT population.

      This confirmation ends years of uncertainty around if and/or when MTD for CT would be introduced. It will come as welcome news to corporates who had concerns regarding the complexities and ultimate benefits of such a system. Whilst the Roadmap makes it clear that the CT system will undergo modernisation, no further detail is given. Taxpayers should monitor announcements carefully to ensure they have their say in the development of the future system.

      The Roadmap also confirms that HMRC are exploring increasing adoption of e-invoicing across UK business and the public sector, following the recent e-invoicing consultation.

      Simplifying and modernising the legislative and administrative framework

      Applying the more agile approach to consultation outlined in HM Treasury’s recently published ‘Tax Policy Making Principles', HMRC will work with businesses and representative organisations to identify ways to simplify tax and customs administration.

      HMRC also have a programme of changes to the tax administration framework including work to resolve tax disputes more effectively and to incentivise customers to pay their tax on time.

      Sharing data and collaborating cross-government

      HMRC will make greater use of data sharing and collaboration across the public sector and, with the appropriate safeguards and controls, the private sector and international partners.

      Delivery

      The Roadmap acknowledges that how this transformation will be delivered is just as important as the changes themselves. To deliver on the Prime Minister’s challenge to go further and faster to deliver a productive and agile state, HMRC will move away from longer-term, larger-scale programmes and into a model of delivering regular, iterative, user-tested changes, allowing for service improvements to be rolled out more quickly, enabling customers to gain more immediate benefits.

      Changes will be developed and delivered in greater consultation with stakeholders and the Roadmap includes commitments and metrics that HMRC will transparently measure progress against.

      A future vision for the tax and customs system

      The Roadmap focusses on HMRC’s plans for the next five years, but the document also discusses the transformation of HMRC over the long term, with a continuing focus on AI, automation and digital identification models. HMRC will develop future plans in partnership with key stakeholders including tax advisers, software developers and the banking and payments sector.

      The Roadmap is hugely ambitious and it remains to be seen whether HMRC will deliver on their commitments, particularly in the timescales they have set out. However, as the 2024 Public Accounts Committee highlighted, HMRC customer service levels are at an all-time low: radical improvement is required and so the scale of ambition set out in the Roadmap should be welcomed.

      For further information please contact:

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