New PAYE service announced to save around 35 million taxpayers' time.
- New PAYE service to make tax system simpler and easier for around 35 million workers.
- At least 90% of customer interactions with HMRC to be digital by 2030.
- Reducing post and letters to save £50 million a year - equal to almost 1,500 full time nurses.
Workers are set to take control of their tax affairs as the government today (21 July 2025) announces a new online Pay As You Earn (PAYE) service for around 35 million UK taxpayers as HM Revenue and Customs (HMRC) sets out more than 50 measures to transform the UK's tax and customs system.
The new online service for all PAYE taxpayers will make it simpler and easier to check and update their income, allowances, reliefs and expenses, and will be available via their Personal Tax Account or through the HMRC app.
This service forms part of HMRC's Transformation Roadmap launched today that sets out ambitious plans to become a digital first organisation by 2030, with 90% of customer interactions taking place digitally.
The roadmap sets out more than 50 IT projects, services and measures that, once delivered, will transform the UK's tax and customs systems, simplifying processes and making it easier to pay the tax that funds public services and deliver the government's Plan for Change.
The plans to modernise the tax and customs system, introduce new AI technologies and work with third parties and intermediaries will make it easier for taxpayers, businesses and intermediaries to interact with HMRC.
The digital first approach will see HMRC automating tax wherever possible and offering new digital self-serve options across a number of tax regimes.
Alongside the new PAYE service, HMRC will save £50 million a year - the equivalent of almost 1,500 full time nurses - by moving customer letters and reminders to a digital first approach, reducing the reliance on paper correspondence, by the 2028 to 2029 tax year. Paper post provision will remain for critical correspondence and for the digitally excluded.
Increasing the use and investment in AI will enable customers to meet their tax obligations and allow HMRC to monitor the tax system in near real time. HMRC plans to introduce AI in work areas including:
- HMRC advisers and caseworkers: using AI capability to automate call summaries and the use of internal GenAI Chat Assistants to support them in their work
- Digital assistants: developing new AI-powered features to help customers easily navigate HMRC services and improve the ability to update HMRC's content and guidance on GOV.UK
- Compliance: delivering an automatic document identifier system for HMRC caseworkers to identify fraudulent documents during compliance activities by using a biometric likeness-liveness check
HMRC will work with developers to create a set of principles which will set out HMRC's expectations of how third parties use AI in software where it interacts with the department and the tax administration system. These principles will give developers the confidence to introduce AI functionality into their products in the UK and minimise the risk of those products introducing error or non-compliance.
James Murray MP, Exchequer Secretary to the Treasury, said:
We are going further and faster to make HMRC fit for the 21st century, including delivering a simpler and easier system for all PAYE workers.
By 2030, taxpayers can expect a modern and innovative HMRC with cutting-edge AI, industry-leading customer service practices, and a laser focus on delivering taxpayer value for money by ensuring everyone pays their fair share.
Mr Murray's key priorities for the department are to improve day-to-day performance and the customer experience, reform and modernise the tax and customs system and to close the tax gap. As announced at the Spending Review 2025, £1.7 billion will be provided to HMRC over 4 years to fund an additional 5,500 compliance and 2,400 debt management staff - to ensure more of the tax owed is paid, to fund public services.
HMRC is focusing on tackling wealthy offshore tax non-compliance, with an additional 400 people set to work on wealthy offshore tax risks. This includes experts in private sector wealth management, who will help find and tackle non-compliance more effectively and train HMRC compliance staff.
JP Marks, HMRC's Chief Executive and First Permanent Secretary, said:
The Government's ambition is for a simpler tax and customs system and this roadmap sets out how HMRC will deliver a first-class experience that feels different to their customers.
By 2030, UK citizens will experience a tax administration system that is more automated, more focused on self-service, and better set up to get things right first time so they can fulfil their tax obligations.
The Transformation Roadmap sets out timescales for delivery and HMRC is committed to reporting on progress. Work is underway to deliver some of the measures set out in the roadmap this tax year, including:
- extending the rollout of the SMS confirmation service to Self Assessment appeals, complaint cases and some PAYE services
- improving Self Assessment registration service and streamlining the exit process for those customers who no longer need to file a Self Assessment tax return
- expanding the rollout of the voice biometrics pilot to make customer verification easier when calling HMRC's helplines
- a new service to give employed parents, who are newly liable for the High Income Child Benefit Charge, the choice to pay it directly through their tax code without needing to register for Self Assessment
- launching an enhanced reward scheme for informants, targeting information on serious non‑compliance in large corporates, wealthy individuals, offshore and avoidance schemes. The new scheme will reward informants with compensation linked to a percentage of any tax taken
Further measures and projects to be delivered as part of the roadmap include:
- digitalising the Inheritance Tax service to provide a modern, easy-to-use system, that makes submitting returns and paying tax simpler and quicker.
- launching a new service to allow agents to digitally submit information which may impact their client's tax code
- delivering a Digital Disclosure Service to allow customers and intermediaries to correct mistakes, pay liabilities and penalties for all taxes and duties
- introducing an electronic trade documentation pilot to see how it could improve customs operations
- progressing the Verifiable Credentials pilot with US Customs and Border Protection to test the use of new internationally interoperable digital credentials and identity standards
HMRC wants to incentivise taxpayers to pay their tax on time by simplifying and strengthening penalties. In the 2023 to 2024 tax year, HMRC collected 94.7% of the total tax due. Those who meet their obligations and pay their tax on time should not be disadvantaged by the minority who don't follow the rules. HMRC will update on modernising behavioural penalties later this year.
New legislation will come into effect from April 2026 to tackle tax avoidance and fraud by umbrella companies. Many umbrella companies operate within the law but the dishonest few can mean taxpayers are left with large and unexpected tax bills. The legislation will make recruitment agencies that use umbrella companies legally responsible for accounting for PAYE on workers' pay.
