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Foreword from the Exchequer Secretary to the Treasury and Chair of the HMRC Board

In 2024 to 2025 I was honoured to be appointed as Exchequer Secretary to the Treasury and Chair of HMRC’s Board. In those roles I have seen the dedication and expertise that drives HMRC, and this Annual Report and Accounts demonstrates the department’s critical contribution to funding our vital public services and facilitating trade and growth.

I have set HMRC 3 priorities:

• closing the tax gap
• improving day-to-day performance and the customer experience
• driving reform and modernisation of the UK’s tax and customs system

These are now enshrined in the department’s strategic objectives and business plan, demonstrating HMRC’s commitment to driving forward the change necessary to improve value for money, collect revenue more efficiently, and support economic growth.

I am committed to challenging HMRC to go further and faster in meeting these priorities, and to championing its work to deliver the tax and customs system the country deserves. The tax gap – the difference between tax collected and theoretical tax liabilities – stood at 5.3%, or £46.8 billion, in 2023 to 2024 – and this year the government has announced the biggest ever package certified by the Office for Budget Responsibility to narrow this gap, including with the help of 5,500 new compliance staff and 2,400 colleagues in debt management over the next 5 years.

This year we have also set out our plans to crack down on the worst behaviours, such as phoenixism, where businesses shut down to avoid paying debts, then start new ones to carry on trading, especially when done repeatedly to commit fraud or dodge liabilities. We have set out how we will use our resources more effectively, such as through the use of Artificial Intelligence (AI) to improve compliance targeting and help staff productivity. Collectively, measures to close the tax gap from Autumn Budget 2024 and Spring Statement 2025 will enable the organisation to bring in an additional £7.5 billion per year by 2029 to 2030.

I am determined that HMRC meets the needs of customers by making it as easy as possible for businesses and individual taxpayers to pay the right tax. But I know that improving customer service cannot be achieved simply by recruiting ever more people to answer the phones. Transforming our digital services and enhancing the HMRC app will help us to reduce demand through phone and post and ultimately deliver a better experience for customers.

That is why, underpinning HMRC’s activities is a commitment to reform and modernisation. HMRC’s long-term strategic and transformation plans, supported by investment in our technology, our people and their skills, will make it as easy as possible for individual taxpayers and businesses to pay the right tax from the outset, fixing problems at source and enabling us to make sure more of the money owed is paid.

At the end of 2024 to 2025, we marked HMRC’s 20th anniversary – a milestone which also coincided with important changes in its leadership. In March, we said farewell to Chief Executive and First Permanent Secretary, Sir Jim Harra, whose leadership was instrumental in steering the department through some very challenging times. In April we welcomed his successor, John-Paul Marks, who brings outstanding experience of leading major change projects and operational delivery across a twenty-year Civil Service career.

This transition has come at a crucial moment, as HMRC steps up to fulfil its critical role in enabling the Prime Minister’s Plan for Change. The tax revenue that HMRC generates underpins the investment and reform necessary to deliver growth, ultimately putting more money in people’s pockets, getting the NHS back on its feet, securing our borders, and rebuilding Britain as part of a decade of national renewal.

Whilst many challenges lie ahead, I am confident that with its clear vision, strong leadership, dedicated workforce and robust transformation plans, HMRC will continue to adapt, improve and deliver on its vital purpose. I invite you to read about HMRC’s work over the past year and the progress made towards building a trusted, modern tax administration system that is fit for the future.

James Murray MP, Exchequer Secretary to the Treasury and Chair of HMRC Board

Foreword from HMRC’s Chief Executive and First Permanent Secretary

It is my privilege to present the HMRC’s Annual Report and Accounts for 2024 to 2025. It’s been a year of progress and we’re building on strong foundations to improve and accelerate modernisation and reform of the UK tax system.

HMRC’s core purpose is to bring in the revenue that funds the UK’s public services and ensure the customs system supports the smooth flow of trade at the border. Alongside our work to reduce the cost of administration for businesses and improve compliance, this helps create the conditions to support economic growth.

I’m proud of what the department has achieved over the last year and I recognise the need to go further in modernising and reforming HMRC and the tax system in the future.

In terms of performance and impact, HMRC collected record revenues in 2024 to 2025 – £875.9 billion (an increase of 3.9% on the previous year) and protected £48.0 billion from fraud and other forms of non-compliance – while providing crucial financial support to people and businesses across the country. This was an increase from £41.8 billion in the previous financial year and exceeded the annual target of £45.4 billion. Next year we will go further, with our yield target increasing to £50.4 billion for 2025 to 2026, and we are determined to build on this through the Spending Review period.

Investment announced at the Budget in October 2024 and the Spring Statement in March 2025, enables us to recruit 5,500 additional compliance officers and further develop our capabilities, to bring in an additional £7.5 billion of tax revenue each year by 2029 to 2030. The tax gap stands at 5.3% based on the latest available data (2023 to 2024) and we are determined to close it further. This new investment will also enable us to mitigate the risks as reported in this report, helping HMRC to improve control, resilience and the level of assurance in the years ahead. 

We are focused on improving our efficiency and effectiveness. For example, HMRC resolved more than £96.7 billion of debt in 2024 to 2025, compared to £48.4 billion in 2019 to 2020, and tax debt as a proportion of total tax receipts fell from 5.2% in 2023 to 2024, to 5.0% in 2024 to 2025. It’s estimated that the government’s investment of almost £630 million in HMRC’s ability to recover debt, will allow over £11 billion more to be collected by the end of 2029 to 2030. We are determined to see debt fall further as a proportion of total tax receipts in the years ahead.

We are also determined to fulfil our digital-first potential. 2024 to 2025 saw HMRC continue improving and expanding 24/7 online services, which rate consistently above 80% for customer satisfaction. The HMRC app now has over 5.9 million users, while more than 1.2 million families have claimed Child Benefit through it or via ÌìÃÀÓ°Ôº. In 2024 to 2025, 83% of claims were made digitally, demonstrating the progress we can achieve.

Supporting more customers to self-serve online or in the HMRC app frees up our advisers to help customers who need extra support or have more complex queries, enabling us to deliver a better experience for all. This helped us make progress on improving our day-to-day support for customers during 2024 to 2025, particularly in quarter 3 when we met our service standard on phones, achieving 85% of telephony adviser attempts handled, and were just shy of meeting our correspondence target. We are committed to sustaining this improved trajectory.

More customers typically need our help in quarter 4 due to the annual tax cycle, and while this was anticipated and planned for, demand and call-handling times on specific lines were higher than planned and this impacted on our performance in January and February, with the percentage of telephony adviser attempts handled falling to 73%. By the end of March 2025, however, this had gone back up to 80%, closer to the service standard. We are focused on improving this, so our customers see more consistent performance in the future.

I’m clear about where we need to improve, and this report points to several further priority areas. For example, we have implemented policy and operational changes in R&D reliefs, including additional information requirements and increasing R&D compliance capacity and activity. As a result, the overall estimate of the level of error and fraud in R&D tax relief schemes in 2022 to 2023 has reduced to 9.9% (£759 million). And while we achieved efficiency savings of £724 million over the last Spending Review period, we know we need to continue reducing cost and improving productivity and efficiency, if we’re to meet our target of £886 million of cumulative annual efficiency savings from 2026 to 2027 to 2028 to 2029.  

We are committed to reform and modernisation of the tax and customs system to improve how we support our customers, make HMRC more productive and efficient and strengthen the security, and resilience of our systems. Our transformation plans will deliver digital services that improve the experience for individuals and businesses in the UK. Taken together, as set out in our Spending Review 2025 settlement, we expect to increase the proportion of customer interactions that are automated or digital self-serve from around 76% in 2024 to 2025 to over 90% by 2029 to 2030.  

Technology is essential to our transformation, and we’ve made progress with testing Making Tax Digital (MTD) for income tax and consulting on plans to introduce e-invoicing, which will help simplify processes, reduce errors and enable businesses to get paid faster. We’re driving forward pilots to test how we can use technology to deliver a simpler tax and customs system that is easier to navigate. This includes exploring the use of generative Artificial Intelligence (AI) to summarise customer calls and working with wider government to continue testing the use of AI chatbots to direct customers to suitable guidance on ÌìÃÀÓ°Ôº. To drive service improvements, we’re harnessing advanced technology, analytics, and customer insight so we can enhance the way we predict, assess, and target support for compliance and debt risks.

Our transformation is also about building a high-performing organisation with a skilled and engaged workforce and we’re doing this through the development of capability academies. Our Digital Academy (launched in 2023) ensures that our people have the skills they need to work in this more digital, data-driven world; and in May 2025 we introduced a Leadership and Management Capability Academy and a Tax, Customs and Compliance Academy, which will ensure that we continue to develop and deepen our core tax, customs and compliance professionalism. We’ve also already exceeded our Places for Growth commitments, with 57% of our senior civil servant roles already outside of London and we are aiming to exceed 60% by 2030. 

So, we’re building from good foundations, but we have more to do to engage, to listen, and to build trust with customers and stakeholders, guided by our Charter standards. We remain absolutely committed to our Charter and to delivering better outcomes for those who try to get their tax right, while dealing firmly with those who don’t follow the rules and try to cheat the system. To help us maintain our relentless focus on improving the customer experience at every touchpoint, in April 2025 we announced the appointment of HMRC’s first Chief Customer Officer and the creation of a dedicated Customer Experience Directorate.

Today the results of our will be published along with this report. I have read these carefully, as well as the Adjudicator’s assessment of how HMRC currently embeds Charter standards. I am clear that to achieve our vision we must put customers first, understand their needs and do even more to make sure our Charter commitments are built into everything we do; and in 2025 to 2026 I will lead the department to be even more focused on the customer experience.

I am pleased to see the many ways we support customers in this report and in the Public Sector Equality Duty (PSED) report, which we’re publishing shortly. The PSED report sets out more detail on the work that HMRC has delivered for customers and colleagues over the last year, to ensure we continue to make progress to become a more inclusive, respectful and representative organisation.

We’ll continue working closely with our partners and stakeholders to build a tax and customs department that is productive, agile and efficient in serving the UK public. I’m also looking forward to working even more closely with the Valuation Office Agency (VOA), as we re-integrate it into the department next year.

We’re well placed to continue improving, meeting challenges and contributing to the government’s missions, while acting with integrity, empathy and fairness, in line with our Charter standards and Civil Service values. I’m confident we have the vision, ambition and investment we need to build our capabilities and improve experiences and outcomes in the future.

John-Paul Marks, Chief Executive and First Permanent Secretary HM Revenue and Customs

Date: 15 July 2025

How we are organised

Our department is made up of 5 core customer-focused groups, supported by corporate services, as set out below.

Our core customer groups

Customer groups	Purpose of customer group
Customer ÌìÃÀÓ°Ôº	Supports customers to pay the right tax and get the right benefits and helps those who have built up debt to pay what they owe
Customer Compliance	Ensures the right tax is paid and intervenes when there is a risk of that not happening
Borders and Trade	Supports UK international trade and the collection of taxes and duties on imports, working closely with Home Office Border Force
Customer Strategy and Tax Design	Works closely with HM Treasury to develop and deliver policy reforms to the UK tax system in support of government priorities, underpinned by high quality customer insight and analysis
Valuation Office Agency	Executive agency which provides expert, independent valuation and property advice to the government and local authorities in England and Wales to support taxation and benefits

Our corporate services

Corporate service	Purpose of corporate service
Change Delivery Group	Drives HMRC’s core transformational change through the delivery of major change programmes and projects
Chief People Officer Group	Designs, develops and oversees implementation of HR policies and services to build a skilled and engaged workforce, supporting HMRC to be a high-performing organisation
Chief Finance Officer Group	Includes our Finance and Commercial functions, as well as Banking services provided to HMRC and other government departments
Chief Digital and Information Officer Group	Designs, develops and runs digital and information services for our people and our customers while ensuring we hold data in a way that is secure and meets legal requirements
Enterprise Transformation Group	Responsible for driving HMRC to realise its vision, deliver its purpose more effectively and to change faster — ensuring that organisational strategy and ministerial policy is delivered
HMRC Legal Group	Provides legal services to HMRC alongside technical accountancy and forensic services
Communications and Guidance	Provides communications advice, support and services to HMRC and manages the provision of up-to-date, accessible guidance for HMRC’s customers, their tax advisers and HMRC customer service colleagues. Incorporates HMRC’s Sustainability Team

Our departmental group had 65,987 full-time equivalent employees at the end of financial year 2024 to 2025, 62,224 in HMRC and 3,763 in the VOA.

Our purpose and vision

HMRC is your tax service. We collect the money that pays for the UK’s public services and give financial support to people.

Our vision is to be a trusted, modern tax and customs department.

Our values

• we are professional
• we act with integrity
• we show respect
• we are innovative

Our strategic objectives

• close the tax gap
• improve day-to-day performance and the overall customer experience
• reform and modernisation of tax and customs administration
• build a high-performing organisation with a skilled and engaged workforce
• support wider government economic aims through HMRC’s work

Our Charter

The HMRC Charter sets out the standards our customers can expect when interacting with us and the experience we want to deliver. The Charter commits us to the following:

• getting things right
• making things easy
• being responsive
• treating customers fairly
• being aware of customers’ personal situations
• recognising that customers can appoint someone to represent them
• keeping customers’ data secure

Performance highlights: 2024 to 2025

An overview of the progress we made towards our vision of being a trusted, modern tax and customs department.

Strategic Objective 1: Close the Tax Gap

Strategic Objective 2: Improve day-to-day performance and the overall customer experience

Strategic Objective 3: Reform and modernisation of tax and customs administration

Strategic Objective 4: Build a high-performing organisation, with a skilled and engaged workforce

Strategic Objective 5: Support wider government economic aims through HMRC’s work