HMRC is continuing to modernise its services as part of the government’s ‘Plan for Change’, aiming to improve efficiency, reduce admin for taxpayers, and close the tax gap. Here’s what’s on the horizon:

A new PAYE portal

A new digital PAYE portal will launch in April 2025, giving 34 million employees and pensioners a simpler way to view and update the data HMRC holds about their income and pensions. The portal will also provide clearer explanations of changes to tax codes.

Improving customer service

HMRC is testing the use of generative AI to help guide users to the right information on GOV.UK. It’s also looking to other successful UK brands for inspiration on better customer support.
Voice ID technology will be rolled out more widely too, helping taxpayers pass security checks more quickly and securely over the phone.

A digital-first approach

HMRC is becoming a more digital-first organisation, with plans to publish a full ‘transformation roadmap’ in summer 2025. It’s investing in better use of technology to simplify services and cut down on time-consuming admin.

One example: HMRC is working with financial institutions to improve the quality of the data it receives so it can pre-fill sections of tax returns and make PAYE codes more accurate. This means less paperwork for taxpayers and fewer errors.

Strengthening compliance and tackling tax avoidance

Alongside improving services, HMRC is stepping up efforts to crack down on non-compliance, especially among larger businesses and wealthier individuals:

• More compliance staff and smarter targeting: HMRC has been given extra budget to recruit more compliance officers and debt collectors. It’s also using AI and advanced analytics to better target its investigations and improve productivity.
• Focus on offshore non-compliance: A new push is underway to uncover hidden offshore funds. HMRC is hiring experts from the private wealth sector to support this work.
• Tougher action against tax avoidance schemes:
  • New legislation is being drafted to increase HMRC’s powers and sanctions against those who promote or market avoidance schemes.
  • A consultation is also exploring whether HMRC has the right tools to deal with non-compliance linked to unethical tax advisers.

New reward scheme for reporting tax fraud

A new scheme launching later this year will offer rewards to people who report serious tax fraud. It will focus on large corporates, wealthy individuals, offshore arrangements, and avoidance schemes.

Updates to penalties and interest

• Late payment penalties for MTD taxpayers will increase from April 2025 (or from when a person or business joins Making Tax Digital, if later).
  • 3% penalty if tax is 15 days late
  • Another 3% if it’s 30 days late
  • Plus 10% per year if the tax remains unpaid after 31 days
• Late payment interest rates will rise by 1.5 percentage points from 6 April 2025, setting the interest rate at the Bank of England base rate plus 4% for most taxes.
• A wider penalty review is underway, looking at how penalties are applied when someone makes a mistake in a return or fails to tell HMRC about something that affects their tax. The aim is to simplify the system, with a continued focus on distinguishing between honest mistakes and deliberate evasion.

Need support?

All these changes underline how important it is to stay on top of your tax responsibilities and plan ahead for future liabilities. If you’re unsure how these updates might affect you, we’re here to help.