HM Revenue and Customs’ settlement at the Spending Review 2015
The Chancellor has published the results of the Spending Review, including details of HMRC's budget over the course of this Parliament.
The Spending Review and Autumn Statement delivers on the government’s priority to provide security to working people at every stage of their lives. It sets out a 4 year plan to fix the public finances, return the country to surplus and run a healthy economy that starts to pay down the debt. By ensuring Britain’s long term economic security, the government is able to spend £4 trillion on its priorities over the next 4 years.
For HM Revenue and Customs (HMRC) this means:
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£717 million of sustainable resource savings a year by 2019-20, achieving £1.9 billion cumulative savings over the Spending Review period, representing a headline 21% reduction in baseline resource costs, delivered through digitisation of tax collection and a smaller but more highly skilled workforce
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£1.3 billion reinvested to transform HMRC into one of the most digitally advanced tax administrations in the world, with access to digital tax accounts for all small businesses and individuals by 2016-17, delivering an additional £1 billion of tax revenue by 2020-21 and sustainable efficiencies
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£800 million confirmed funding for additional work to tackle evasion and noncompliance in the tax system, delivering an additional £7.2 billion over the next 5 years
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£400 million total reduction in business customer costs by 2019-20
HMRC settlement (£ billion)
| 2015-16 baseline | 2016-17 | 2017-18 | 2018-19 | 2019-20 | 2020-21 [3] | |
|---|---|---|---|---|---|---|
| Resource DEL [1] | 3.3 | 3.5 | 3.4 | 3.1 | 2.9 | * |
| Capital DEL [2] | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 |
| Total DEL | 3.5 | 3.8 | 3.6 | 3.4 | 3.1 | * |
[1] In this table, Resource Departmental Expenditure Limits (DEL) excludes depreciation
[2] Includes £45m over the period for the Valuation Office Agency
[3] 2020-21 Resource DEL departmental budgets have only been set for some departments. For the rest, these budgets will be set in full at the next Spending Review
HMRC will continue to tackle fraud and error in the tax credits system and will work with debt collection agencies to collect £324 million of tax credit debts owed by 2019-20.
Long-term investment
This Spending Review confirms funding to maintain HMRC’s current level of compliance performance while making efficiencies, and £800 million to fund additional work to tackle evasion and non-compliance by 2020-21. The government is committed to raising an additional £5 billion a year through tackling avoidance, aggressive tax planning, evasion, non-compliance and imbalances in the tax system by 2019-20.
Efficiency and reform
Through re-investment of £1.3 billion HMRC will transform into one of the most digitally advanced tax administrations in the world, becoming more effective, efficient and easier for taxpayers to deal with while delivering sustainable efficiencies and almost £1 billion of additional tax revenues by reducing errors through record-keeping. All individuals and businesses will be able to view their tax affairs in real time, providing them with greater certainty about the tax they owe. HMRC expects the number of calls to reduce from 38 million in 2015-16 to 15 million in 2019-20, as customers increasingly find all the information and services they need online.
HMRC will find significant savings by consolidating its estate from 170 offices to 13 large, modern regional centres. These centres will bring staff into more cost-effective buildings while making it easier for HMRC teams to collaborate and modernise the way they work.
Chief Executive of HM Revenue and Customs, Lin Homer, said:
This settlement will enable HMRC to become more highly-skilled and more cost-effective as it transforms into one of the most modern and digitally advanced tax authorities in the world.
The tax system will be streamlined and customer service improved through better use of data, both for catching the dishonest minority who try to cheat the system and supporting the honest majority in getting their tax right. And we’ll do this while increasing the extra tax collected from those who do not pay the tax they owe by £7.2 billion by 2020-21.