HMRC have published a progress update to their 2025 Transformation Roadmap. The update shows how changes are being made to allow HMRC to collect more of the tax that is due through automation.
The former Exchequer Secretary to the Treasury, James Murray MP, said that changes would reduce, "...the time that people spend managing their tax affairs, and freeing businesses’ time to focus on growth."
The five-year Roadmap was published in July 2025 and set out three priorities for HMRC:
- Improving day-to-day performance and taxpayer experience.
- Closing the tax gap.
- Reforming and modernising tax and customs administration.
The update notes that to fix the underlying structural issues in the tax system, and increase the compliance yield to address the tax gap, HMRC is:
- Using automation, data and AI to move faster, test earlier and scale success.
- Investing in technology and people.
- Collaborating with suppliers, partners and other government departments such as HM Treasury and the Cabinet Office.
Improving day-to-day performance and the taxpayer experience
During 2025-26, there was a slight increase in 'digital engagement', which grew to 78% from 76% in 2024-25.
- Taxpayer satisfaction scores across HMRC’s contact channels remained at an average of around 80%.
- Use of the HMRC app grew from 5.9 million unique users in 2024-25 to 7.6 million in 2025-26.
- Self-assessment payments via the app in January 2026 were £819 million, compared to £499 million the previous year.
Since April 2025, HMRC has delivered several enhancements to its digital services, including:
- New features in the Personal Tax Account, including estimates of Income Tax and plain English explanations.
- Making it easier for taxpayers to manage their Self Assessment (SA) records online by allowing them to:
- Close their Self Assessment record more quickly.
- Register for SA more easily with the pre-population of personal details and confirmation by email and text.
- Improving how National Insurance refunds are administered, with plans for a digital refund service for taxpayers who have overpaid NICs.
- Enhancements to Child Benefit services, including:
- Enabling eligible taxpayers to pay the High-Income Child Benefit Charge (HICBC) through their PAYE tax code.
- A digital service to inform HMRC of a child’s education status, and the development of a claim tracking service.
- Improvements to how cases are identified where more than one person has claimed for the same child.
- Prepopulation of SA returns for 2026-27, as was previously promised for 2025-26.
- Enhanced online Time to Pay services and an improved digital Budget Payment Plan service.
To support small businesses, HMRC has:
- Enabled visibility of Payment on Account (POA) schedules within the VAT Business Tax Account (BTA) and introduced the display of the VAT registration name and number therein.
- Commenced replacing existing ‘print and post’ services for the Option to Tax G-form when cancelling VAT registration.
- Launched workshops to work on the design of the UK e-invoicing regime and development of an implementation roadmap, to be published at Budget 2026, ahead of the mandation of e-invoicing for all VAT invoices from April 2029.
- Enhanced the Online Trade tariff tool to support businesses navigating the customs system.
Further changes are planned during the current tax year, which include:
- Improved digital expenses service for Flat Rate Expenses, to be expanded to Professional Subscriptions and Mileage.
- Improved online PAYE service to include more information about under- or overpayments and Tax code adjustments.
- A new digital Inheritance Tax service from 2027-28.
In upcoming changes to make it easier for taxpayers to register and use HMRC’s digital services, the proess will be simplified through GOV.UK One Login a single sign-in and identity-checking solution.
- The intention is to transition new and existing agents and organisations to GOV.UK One Login by 2030.
Closing the tax gap
The 2023-24 tax gap was estimated at 5.3%, rising to 6.4% for 2024-25. The following measures are currently in progress to reduce the gap:
- Improved exploitation of the third-party data HMRC receives, starting with targeted nudges in the MTD for Income Tax service to help taxpayers avoid making errors in their submissions, to be extended to VAT from April 2027.
- Launched HMRC's first 'Closing the Tax Gap' competition with the private sector to bring in and test AI, data science and other innovative approaches to tackle deliberate evasion and improve compliance.
- Improvements to the HMRC case management system, including:
- The rollout of Microsoft Copilot to over 28,000 HMRC caseworkers.
- A Digital Disclosure Service to allow taxpayers to correct mistakes and pay liabilities and penalties from 2027-28.
- Recruitment of an additional 5,500 compliance officers, plus 20 external experts to deal with offshore non-compliance.
- Mandatory tax adviser registration from May 2026.
- A requirement for tax advisers to obtain an Advanced Electronic Signature from clients when making certain Income Tax repayment claims on their behalf.
Reform and modernisation
Since April 2025, HMRC has continued to modernise its IT infrastructure, which includes:
- Moving to new IT systems, including a central, joined-up customer registry.
- Improvements to the CDS and the Goods Vehicle Movement Service (GVMS), with improvements to Corporation Tax systems to be completed in 2028.
- The use of AI to:
- Create testing environments with AI-generated data.
- Summarise and prepare draft notes from taxpayer calls.
- Simulate realistic taxpayer conversations for training purposes.
- The introduction of digital ATA Carnets from 1 June 2026 for the temporary movement of goods internationally.
- Consultation on more timely payments on account for Income Tax under SA.
Valuation Office transformation
In April 2026, the Valuation Office (VO) was integrated into HMRC and has reduced its valuation cycle from five to three years. Over the next three years, the VO will invest in a modern valuation operating system incorporating AI to deliver:
- Quicker outcomes for customers who challenge their business rates.
- Faster removal of properties from the Council Tax list.
- Faster decisions in respect of:
- Business rate payers facing hardship.
- Business rates and Council Tax for self-catering properties.
- Council Tax banding review requests and banding for new properties.
Useful guides on this topic
Finance Acts 2026-27: tax update and Rolling Tax Planner
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