HMRC Just Got £500 Million to Go Fully Digital — But Is Everyone Ready?

In the 2025 Spending Review, the Chancellor unveiled a significant commitment to modernising HMRC: an extra £500 million over the next five years to push 90% of all taxpayer interactions online by 2030. That’s on top of the £1.7 billion already earmarked for staffing and compliance.

The ambition?

To make HMRC a “truly digital-first organisation”, open 24/7, with fewer delays, lower admin costs, and a reduced need for phone calls or letters.

Sounds great, right? Well... yes — and no.

What’s Changing?

Big Investment in Digital

• £500m to shift 90% of customer interactions online (up from 70%)

• Paper-based processes (like Inheritance Tax) to become digital priorities

• A new AI-powered telephony system to improve call centre wait times

• Full overhaul of legacy IT systems, and automation tools for compliance work

More Compliance Pressure

• 5,500 new compliance officers + 2,400 debt recovery staff

• Predicted to raise £7.5bn annually by 2030 — though results may take years

Office Closures & Restructures

• 25% reduction in London office estate

• Shift to regional offices and shared government hubs

Our Take as Ex-HMRC Tax Inspectors

The move to digitise HMRC isn’t just a tech update — it’s a fundamental reshaping of how the UK handles tax compliance.

And while there are some obvious upsides — better systems, less paper, fewer delays — there are serious concerns that must not be ignored.

Is Everyone Really Ready for This?

Digital inclusion is the elephant in the room.

*What about those without reliable internet access?

*What about elderly taxpayers who aren't tech-savvy?

*What about self-employed individuals navigating Making Tax Digital for the first time?

While the Treasury insists that phone lines and alternative channels will remain open “for those that need them,” they’ve yet to explain how they’ll identify and support these groups — or how easy those channels will be to access.

Digital ≠ Simpler for Everyone

A 24/7 tax portal sounds like progress — until you’re faced with a confusing interface, unclear instructions, or a chatbot that can’t understand your question.

As former inspectors, we’ve seen first-hand how nuanced tax compliance can be. Even the most user-friendly digital form won’t replace the need for expert advice when a client’s circumstances are complex or unclear.

Compliance Isn't One-Click

HMRC is also facing:

• Staffing challenges (already down 4% last year)

• Legacy system headaches

• A 13.1% cut in its overall budget over five years

Even with tech improvements, the risks of error, miscommunication, or system failure remain — especially during transition periods.

What Should Taxpayers Do?

If you’re feeling overwhelmed or uncertain about how these changes may affect you, you’re not alone.

At The Tax Faculty, we’re ex-HMRC professionals who know the law inside out — and we help clients:

• Understand their digital tax obligations

• Avoid common errors during online filing

• Access all available reliefs (even the obscure ones)

• Remain fully compliant while reducing tax liabilities wherever possible

Final Thought: Digital by Default ≠ Digital for All

Progress is great — but only if everyone can keep up.

As HMRC transforms, the risk is that the most vulnerable get left behind.

So if you’re unsure where you fit in, or how to adapt, let’s talk before the system does.

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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