2024 to 2025 Main Estimate: Memorandum for HM Revenue and Customs
Published 16 August 2024
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1. Objectives
1.1 Introduction
This Estimate covers the expenditure and income of HM Revenue and Customs (HMRC) including its Executive Agency, the Valuation Office Agency (VOA). This Estimate has been prepared during a general election and the priority outcomes were set in the previous Parliament.
HMRC’s vital purpose touches the lives of almost everyone in the UK. We collect the money that pays for the public services that millions of people rely on every day. We also help families and individuals with targeted financial support, such as tax credits, Child Benefit and Tax-Free Childcare.
The VOA gives the government the valuations and property advice needed to support taxation and benefits.
The purpose of this Memorandum is to provide the Select Committee with an explanation of how the resources and cash sought in this Main Estimate will be applied to achieve HMRC’s objectives and priority outcomes.
Our vision
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 current priority outcomes
Our current priority outcomes are:
- collect the right tax and pay out the right financial support
- make it easy to get tax right and hard to bend or break the rules
- maintain taxpayers’ consent through fair treatment and protect society from harm
Delivery of these priority outcomes is underpinned by our two other current strategic objectives: to make HMRC a great place to work; and to support wider government economic aims through a resilient, agile tax administration system.
We are also supporting the delivery of the following cross-cutting outcomes, led by other government departments:
- support families, protect young people, and enable all to engage with education and training through high quality local services, early education and childcare (Department for Education)
- modernise the UK border to ensure it is world class and fulfils its function to keep us safe, secure and bio-secure while allowing trade flow (Cabinet Office)
- reducing crime: Safe neighbourhoods, support for victims and tough action through common-sense policing (Home Office)
1.2 Spending controls
HMRC’s spending is broken down into several different spending totals, for which Parliament’s approval is sought.
The key spending control totals for HMRC, which Parliament votes, are:
- Resource Departmental Expenditure Limit (“Resource DEL”) – typically our day-to-day running costs
- Capital Departmental Expenditure Limit (“Capital DEL”) – investment in infrastructure
- Resource Annually Managed Expenditure (“Resource AME”) – less predictable and more difficult to control than expenditure in DEL, day-to-day spending, which includes Tax Credits, Child Benefit, Tax Free Childcare, Lifetime ISA and certain other reliefs and entitlements
Budgets are split between those voted by Parliament and those where appropriation is covered in other legislation (non-voted).
In addition, Parliament votes a net cash requirement, which provides HMRC with the cash required to meet its ongoing payment obligations.
1.3 Main areas of spending
HMRC Resource DEL 2024 to 2025 budget
Note: numbers may not sum due to rounding. Utilised provisions sum to £0.02bn.
HMRC Capital DEL 2024 to 2025 budget
Note: numbers may not sum due to rounding.
HMRC Resource AME 2024 to 2025 budget
Note: Other includes all other elements of RAME, as set out in the table at Section 2.1.
1.4 Comparison of funding totals sought
Below is a summary of the key funding changes between the amounts sought for the Main Estimate 2024 to 2025, the final budget at Supplementary Estimate for 2023 to 2024 and the original budget at Main Estimate 2023 to 2024. The key drivers of funding changes are detailed in section 1.5.
Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.
| Spending total amounts sought this year (Main Estimate 2024 to 2025) £ million | Difference compared to last year’s final budget (Supplementary Estimates 2023 to 2024) £ million | Difference compared to last year’s final budget (Supplementary Estimates 2023 to 2024) % | Difference compared to last year’s original budget (Main Estimate 2023 to 2024) £ million | Difference compared to last year’s original budget (Main Estimate 2023 to 2024) % | |
|---|---|---|---|---|---|
| Resource DEL | 5,559 | -1,135 | -17% | -816 | -13% |
| Capital DEL | 508 | -243 | -32% | -120 | -19% |
| Resource AME | 28,264 | -8,095 | -22% | -7,206 | -20% |
| Capital AME | 0 | -20 | -99% | 0 | 139% |
Note: numbers may not sum due to rounding
HMRC DEL 2024 to 2025 comparison to 2023 to 2024 Supplementary and Main Estimates
HMRC AME 2024 to 2025 comparison to 2023 to 2024 Supplementary and Main Estimates
1.5 Key drivers of spending changes last year
Resource DEL
The Resource DEL funding for the 2024 to 2025 Main Estimate has decreased from the 2023 to 2024 Supplementary Estimate by £1,135 million. Below highlights the key drivers behind this decrease.
Removal of the Cost of Living payments budget (£760 million) as no further payments are planned for 2024 to 2025.
HMRC received £212 million additional funding for inflationary pressures faced in 2023 to 2024. These pressures are ongoing but have not been included within the Main Estimates 2024 to 2025 funding.
The 2023 to 2024 Supplementary Estimates included £6.3 million additional funding for Windsor Framework implementation and the Trader Support Service, and £25.1 million funding for the Unity Programme, which are not included in the Spending Review 2021 (SR21) settlement figures or 2024 to 2025 Main Estimates funding (see HMRC administration paragraph in section 2.1.1 for further detail) but are expected to be included in the 2024 to 2025 Supplementary Estimates.
Capital DEL
Capital DEL funding for the 2024 to 2025 Main Estimate has decreased from 2023 to 2024 Supplementary Estimates by £243 million. Below highlights the key drivers behind this decrease.
2024 to 2025 SR21 settlement for Capital DEL is £110 million lower than 2023 to 2024. The core CDEL funding remained steady over the SR21 settlement period. However, the CDEL funding for EU Exit and other programme costs reduced significantly by 2024 to 2025. This is due to large delivery programmes finishing by the third year of the settlement and moving reduced EU Exit costs to business as usual budgets.
£6.2 million for fiscal events funding (see HMRC administration paragraph in section 2.1.1 for further detail)
The 2023 to 2024 Supplementary Estimates included £95.3 million funding for Windsor Framework implementation and the Trader Support Service, and £2.6 million IFRS 16 funding. This funding has not been included in the 2024 to 2025 Main Estimates (see HMRC administration paragraph in section 2.1.1 for further detail).
Resource AME
Resource AME funding for the 2024 to 2025 Main Estimate has decreased from 2023 to 2024 Supplementary Estimates by £8,095 million. Below highlights the key drivers behind this decrease.
Decrease in Personal Tax Credit forecast for 2024 to 2025 due to movement of claimants from Tax Credits to Universal Credit, which is administered by the Department for Work and Pensions (see section 2.2.11).
Effective end of Covid Job Retention Scheme (CJRS) forecast for COVID-19 grant scheme payments due to payments no longer being expected (see section 2.2.10).
Reduction in Other Reliefs and Allowances to reflect latest forecasts (see section 2.2.12)
Capital AME
Capital AME funding for the 2024 to 2025 Main Estimate has decreased from 2023 to 2024 Supplementary Estimates by £19.9 million.
This was down to a £19.9 million reduction in IFRS16 Capital AME requirement due to a change in the way dilapidations provisions are accounted (see section 2.2.6).
1.6 New policies and programmes: ambit changes
Policy announcements
A number of policy measures have been announced over two main fiscal events during the past year, which we will continue to implement in 2024 to 2025 in line with the passage of the relevant Finance Bills through the House – namely, in the Autumn Statement 2023 on 22 November 2023 and the Spring Budget 2024 on 6 March 2024.
A small number of measures have also been announced separately from these fiscal events, which were accompanied by appropriate Written Ministerial Statements.
Ambit changes
Since Supplementary Estimate 2023 to 2024, Revenue and Customs Digital Technology Services Limited, which ceased trading on 31 March 2023 and was dissolved in 2023 to 2024, has been removed from the ambit.
1.7 Spending trends
The charts below show overall spending trends since 2019 to 2020 and our budgets for this financial year (2024 to 2025).
HMRC Group Resource DEL
Resource DEL has reduced by 17% from the 2023 to 2024 Supplementary Estimate. This is due to a reduced SR21 settlement in 2024 to 2025.
The year-on-year increase from 2019 to 2020 to 2022 to 2023 was primarily driven by funding received for delivering COVID-19 related activity and Borders and Trade functions. There was also additional funding received from 2022 to 2023 to 2023 to 2024 for Cost of Living payments, Windsor Framework implementation and Trader Support Service, and funding required to cover customer service, customer compliance and technical remediation pressures. This funding is not part of the 2024 to 2025 Main Estimate.
HMRC Group Capital DEL
Capital DEL has reduced by 34% from the 2023 to 2024 Supplementary Estimate in line with HMRC’s SR21 settlement and additional funding granted in the 2023 to 2024 Supplementary Estimate for Windsor Framework which is not part of the 2024 to 2025 Main Estimate.
HMRC Group Resource AME
Resource AME has decreased by 22% from the 2023 to 2024 Supplementary Estimate. This is due to reduced funding required for Personal Tax Credit due to the migration to Universal Credit, full details are set out in 2.2.1 to 2.2.12. Since 2020 to 2021, there has been a downward trend in Resource AME, with a significant decrease in 2021 to 2022 and a smaller decrease in 2022 to 2023 due to the decreased funding for COVID-19 grants following the closure of the support schemes.
1.8 Administration costs and efficiency plans
Administration costs
HMRC’s RDEL Administration budget has minimal movement since the 2023 to 2024 Supplementary Estimate.
Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.
| RDEL Administration sought this year (Main Estimate 2024 to 2025) £ million | Difference compared to last year’s final budget (Supplementary Estimates 2023 to 2024) £ million | Difference compared to last year’s final budget (Supplementary Estimates 2023 to 2024) % | Difference compared to last year’s original budget (Main Estimate 2023 to 2024) £ million | Difference compared to last year’s original budget (Main Estimate 2023 to 2024) % | |
|---|---|---|---|---|---|
| Administration | 1,085 | -16 | -1.5% | -16 | -1.4% |
Note: numbers may not sum due to rounding
HMRC Resource DEL administration comparison to 2024 to 2024
HMRC efficiencies
As at SR21, HMRC’s efficiency target (as agreed with HMT) by the end of 2024 to 2025 is £500 million. This includes:
- investment-led efficiencies from programmes including Securing our Technical Future, Technology Sourcing Programme and the Locations Programme
- continuous improvement efficiencies
- savings from our 2021 Pay and Contract Reform package
Overall, HMRC need to deliver an even higher level of efficiency and savings than the target level (£770 million), to deliver performance standards and expectations within budgets, due to increased inflationary pressures since SR21. We are on track to exceed our original target of £500 million; however, around £80 million of our overall forecast of £770 million by the end of 2024 to 2025 is at significant risk.
Plans will be closely monitored by ExCom throughout the year, to ensure all elements required to enable achievement of our financial and performance targets in the final year of this spending review are delivered.
1.9 Funding: spending review and budgets
SR21 set the overall Departmental budget for resource and capital expenditure in 2024 to 2025. Since then, HMRC has made changes to the budgets. The details of these changes are set out below.
2024 to 2025 Budgets (as per Settlement Letter)
| RDEL admin £ million | RDEL prog £ million | Total RDEL £ million | CDEL £ million | TDEL £ million | |
|---|---|---|---|---|---|
| SR21 (as per Settlement Letter) | 1,082.7 | 3,987.4 | 5,070.1 | 468.8 | 5,538.9 |
| o/w depreciation ringfence | 107.8 | 271.6 | 379.4 | 0.0 | 379.4 |
| 2024 to 2025 Main Estimate changes | |||||
| Single Trade Window | 0.0 | 59.5 | 59.5 | 30 | 89.5 |
| Labour Markets evaluation | 0.0 | 0.7 | 0.7 | 0.0 | 0.7 |
| IFRS 16 | -26.6 | -46.8 | -73.4 | 1.8 | -71.6 |
| IFRS 16 depreciation | 33.0 | 53.1 | 86.1 | 0.0 | 86.1 |
| Health and Social Care Levy Surrender | -10.0 | -12.6 | -22.6 | 0.0 | -22.6 |
| Depreciation budget adjustment | 5.7 | 371.8 | 377.6 | 0.0 | 377.6 |
| Spend to Raise AS23 Funding | 0.0 | 15.7 | 15.7 | 0.0 | 15.7 |
| AS23 - Credit reference agency data | 0.0 | 0.0 | 0.0 | 0.7 | 0.7 |
| SB24 - Carbon Border Adjustment | 0.0 | 0.8 | 0.8 | 0.0 | 0.8 |
| SB24 - Vaping Products Duty | 0.0 | 3.4 | 3.4 | 5.4 | 8.8 |
| SB24 - Improving Agent Registration | 0.0 | 3.7 | 3.7 | 0.0 | 3.7 |
| SB24 - Crypto-Asset Reporting Framework | 0.0 | 0.8 | 0.8 | 0.0 | 0.8 |
| Adjustments Sub-total | 2.1 | 450.1 | 452.3 | 38.0 | 490.3 |
| Other Government Department (OGD) budget transfers | |||||
| Foreign, Commonwealth and Development Office (Incoming): EECAD Conflict, Stability & Security Fund (CSSF) portfolio | 0.0 | 0.1 | 0.1 | 0.0 | 0.1 |
| Foreign, Commonwealth and Development Office (Incoming): Common Platform Baseline transfer | 0.0 | 3.0 | 3.0 | 0.0 | 3.0 |
| Cabinet Office (Outgoing): Civil Service Live Contribution (From 23/24 Heads of Place) | -0.2 | 0.0 | -0.2 | 0.0 | -0.2 |
| Cabinet Office (Outgoing): CDIO contribution to ROSA infrastructure improvements | 0.0 | 0.0 | 0.0 | -0.5 | -0.5 |
| Department for Work and Pensions (Incoming): Universal Credit | 0.0 | 33.6 | 33.6 | 1.2 | 34.9 |
| OGD Budget Transfers Sub-total: | -0.2 | 36.8 | 36.5 | 0.7 | 37.2 |
| 2024 to 2025 Main Estimate Total | 1,084.6 | 4,474.3 | 5,558.9 | 507.5 | 6,066.4 |
Note: numbers may not sum due to rounding
Net Budget Cover Transfers with other government departments
HMRC has the following Budget Cover Transfers with other government departments.
| Government department | £000 |
|---|---|
| Cabinet Office | -749 |
| Department for Work and Pensions | 34,873 |
| Foreign, Commonwealth and Development Office | 3,107 |
| #Net Transfers | 37,231 |
2. Spending detail
2.1 Explanation of changes in Departmental Expenditure Limit
The table below shows HMRC’s spending budget for Resource DEL and Capital DEL compared to 2023 to 2024 Supplementary Estimate.
Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.
| Estimate line | Description | Resource Main Estimate budget sought (£ million) | Resource Supplementary Estimate 2023 to 2024 (£ million) | Resource difference (+/-) compared to Supplementary Estimate 2023 to 2024 (£ million) | Resource difference (+/-) compared to Supplementary Estimate 2023 to 2024 (%) | Capital Main Estimate budget sought (£ million) | Capital Supplementary Estimate 2023 to 2024 (£ million) | Capital difference (+/-) compared to Supplementary Estimate 2023 to 2024 (£ million) | Capital difference (+/-) compared to Supplementary Estimate 2023 to 2024 (%) |
|---|---|---|---|---|---|---|---|---|---|
| A | HMRC administration | 5,094 | 5,480 | -386 | -7% | 467 | 715 | -248 | -35% |
| B | VOA administration | 212 | 186 | 27 | 14% | 41 | 36 | 5 | 13% |
| C | Utilised Provisions | 20 | 35 | -15 | -43% | 0 | 0 | 0 | 0% |
| - | Cost of Living | 0 | 760 | -760 | 100% | 0 | 0 | 0 | 0 |
| Subtotal (voted) | 5,326 | 6,461 | -1,134 | -18% | 508 | 751 | -243 | -32% | |
| D | National Insurance Fund | 233 | 233 | 0 | 0% | 0 | 0 | 0 | 0 |
| Subtotal (non-voted) | 233 | 233 | 0 | 0% | 0 | 0 | 0 | 0 | |
| Total (voted and non-voted) | 5,559 | 6,694 | -1,134 | -17% | 508 | 751 | -243 | -32% |
2.1.1 HMRC administration (Section A)
The decrease of budget at the Main Estimate reflects the removal of the Cost of Living payments budget (£760 million), and inflationary pressures faced which have not been funded at Main Estimate 2024 to 2025.
The budget for implementation of the Windsor Framework will be agreed at the 2024 to 2025 Supplementary Estimate.
The budget includes additional funding of £30.6 million (£24.4 million RDEL and £6.2 million CDEL) for implementing new measures announced at fiscal events, including £15.7 million for Spend to Raise to deliver additional scoreable tax revenues and £14.7 million for measures which were announced at Autumn Statement 2023 and Spring Budget 2024.
In addition, the SR21 settlement for 2024 to 2025 has a £343.7 million reduction in Resource (£233.7 million) and Capital (£110 million) DEL compared to 2023 to 2024. They also included the efficiency target of £500 million by 2024 to 2025, as well as programme & EU Exit costs expected to reduce by 2024 to 2025. This is as the programmes & EU Exit programmes finish and become business as usual, therefore reducing the costs associated.
The depreciation budgets were not agreed at the SR21 settlement but are agreed at the Main or Supplementary Estimates of the respective financial year. Therefore, the Main Estimates budget includes an increase of £377.6 million to reflect the latest depreciation forecasts for 2024 to 2025.
2.1.2 VOA administration (Section B)
The increase in budget at the Main Estimate reflects an additional £15 million funding (£10 million RDEL and £5 million CDEL) for the Fundamental Review of Business Rates.
2.1.3 Utilised provisions (Section C)
This section covers the provision requirements for HMRC. When provisions are utilised, the cost is moved from AME to DEL as an equal and opposite transaction. Provisions are inherently unpredictable in terms of the timing and value of settlements.
HMRC have an established process in place to regularly review and monitor provisions. Since the 2023 to 2024 Supplementary Estimate there has been a £15 million reduction in Utilised Provisions due to updated forecasting.
2.1.4 National Insurance Fund (Section D)
There is no movement from the 2023 to 2024 Supplementary Estimate.
2.2 Spending Detail: Annually Managed Expenditure
| Estimate Line | Description | Resource Main Estimate Budget Sought 2024 to 2025 (£ million) | Resource Main Estimate Budget Sought 2024 to 2025 (£ million) | Resource Main Estimate Budget Sought 2024 to 2025 (£ million) | Resource Main Estimate Budget Sought 2024 to 2025 (%) |
|---|---|---|---|---|---|
| E | Child Benefit | 13,992 | 12,897 | 1,095 | 8% |
| F | Tax Free Childcare | 558 | 632 | -73 | -12% |
| G | Providing payments in lieu of tax relief to certain bodies | 161 | 156 | 5 | 3% |
| H | Lifetime ISA | 523 | 501 | 23 | 5% |
| I | Help to Save | 64 | 46 | 17 | 38% |
| J | HMRC Administration | 20 | 20 | 0 | - |
| K | VOA - Payments of rates to LAs on behalf of certain bodies (POLAR) | 96 | 88 | 8 | 9% |
| L | VOA - Administration | 2 | 2 | 0 | - |
| M | Utilised Provisions | -20 | -20 | 0 | - |
| N | COVID-19 | 0 | 5 | -5 | -96% |
| Sub-total (Voted) | 15,396 | 14,327 | 1,069 | 7% | |
| O | Personal Tax Credit | 1,875 | 8,768 | -6,869 | -79% |
| P | Other Reliefs and Allowances | 10,993 | 13,264 | -2,271 | -17% |
| Sub-total (non-voted) | 12,868 | 22,033 | -9,165 | -42% | |
| Total (Voted and non-voted) | 28,264 | 36,360 | -8,095 | -22% |
Note: numbers may not sum due to rounding
There is also a Capital Annually Managed Expenditure (CAME) budget of £10,000 for the utilisation of the Child Trust Fund provision, and £250,000 for VOA IFRS16.
2.2.1 Child Benefit (Section E)
Upwards adjustment since Supplementary Estimates due to changes to the High Income Benefit Charge, the threshold for which has increased from £50,000 to £60,000, as announced at Spring Budget 2024. It is expected that this will result in a higher number of claimants within 2024 to 2025.
2.2.2 Tax-Free Childcare (TFC) (Section F)
Reduction in the forecast since Supplementary Estimates 2023 to 2024 due to updated Spring Budget OBR determinants. This latest forecast assumes that TFC account take-up amongst the eligible population will increase as a result of improved awareness of TFC through increased coverage and advertisement of TFC. However, the expected increase to AME is substantially outweighed by the reduction in TFC account usage. This is due to substitution from paid childcare as eligible families utilise the Department for Education 30-hours free childcare expansion, which rolls out in April 2024.
2.2.3 Providing payments in lieu of tax relief to certain bodies (Section G)
A slight increase based on the OBR publication and new outturn data. The £161.1 million figure is broken down as follows:
- £125.2 million for Stakeholder Pensions – based on using a weighted average of wage growth and self-employed income growth from Spring Budget 2024 announcements
- £35.9 million for Gift Aid Small Donations Scheme -no change from Supplementary Estimates 2023 to 2024
2.2.4 Lifetime ISA (Section H)
Upwards adjustment as subscriptions are expected to increase due to increased UK wages forecasted by OBR. Longer term trends in the data have now been incorporated, and the inputs have been updated with the latest data.
2.2.5 Help To Save (HTS) (Section I)
Help to Save account holders can save up to £50 a month into their account; accounts mature at the end of the second and fourth year when bonuses are paid. There has been an upwards adjustment due to updated volumetrics and historic data to generate a revised and more accurate forecast, based on a model consistent with previous years.
2.2.6 HMRC administration (New Provisions) (Section J)
Provisions are inherently unpredictable in terms of the timing and value of settlements. HMRC have an established process in place to regularly review and monitor provisions. Since Supplementary Estimates 2023 to 2024 there has been £19.9 million reduction in IFRS16 Capital AME requirement due to a change in the way dilapidations provisions are accounted.
2.2.7 VOA - Payments of rates to Local Authorities on behalf of certain bodies (POLAR) (Section K)
Upwards adjustment to reflect forecast following revised assessments.
2.2.8 VOA – Administration (Section L)
No change since 2023 to 2024 Supplementary Estimates.
2.2.9 Utilised Provisions (Section M)
Provisions are inherently unpredictable in terms of the timing and value of settlements. HMRC have an established process in place to regularly review and monitor provisions. No change since 2023 to 2024 Supplementary Estimates.
2.2.10 COVID-19 (Section N)
The claims window for the COVID-19 schemes closed on 30 September 2021; however, there are some payments outstanding on AME COVID-19 schemes. HMRC are continuing to hold a small budget as there is still the possibility of payment of these exceptional claims.
2.2.11 Personal Tax Credit (Section O)
Since the 2023 to 2024 Supplementary Estimate, the forecast for Personal Tax Credits has dropped to £1.9 billion, a reduction of £6.8 billion. This is due to 2024 to 2025 being the final year of tax credits, which are due to close at the end of March 2025. Claimants are now migrating to Universal Credit. The forecast is highly uncertain in this final year depending on how the pace of Universal Credits migration progresses.
2.2.12 Other Reliefs and Allowances (Section P)
This section covers a range of reliefs paid from public spending, including Large Companies Research and Development Relief, Small Companies Research and Development Relief and Film Tax Relief, as well as the Guardians Allowance. There is a reduction from Supplementary Estimates 2023 to 2024. This is due to a review of outturn data from previous years. Tax relief policies and latest economic determinants have a bearing on these values, based on information available at the time.
2.3 Ringfenced budgets
HMRC have a number of ringfenced budgets that are set by HM Treasury. Any funding provided by HM Treasury for the below items can only be spent on a specific area of spend.
| RDEL Main Estimate 2024 to 2025 £ million | CDEL Main Estimate 2024 to 2025 £ million | RDEL 2023 to 2024 Supplementary Estimates Budget £ million | CDEL 2023 to 2024 Supplementary Estimates Budget £ million | RDEL difference (+/-) compared to Supplementary Estimate 2023 to 2024 £ million | RDEL difference (+/-) compared to Supplementary Estimate 2023 to 2024 % | CDEL difference (+/-) compared to Supplementary Estimate 2023 to 2024 £ million | CDEL difference (+/-) compared to Supplementary Estimate 2023 to 2024 % | |
|---|---|---|---|---|---|---|---|---|
| Post-scheme Covid-19 costs | 9.7 | 0.0 | 13.3 | 0.0 | 3.6 | 37% | 0.0 | - |
| Counter Fraud Packages for Covid-19 | 23.0 | 0.0 | 22.5 | 0.0 | -0.4 | -2% | 0.0 | - |
| UK Transition | 441.7 | 164.9 | 549.4 | 321.2 | 107.7 | 24% | 156.3 | 95% |
| Revenue Raising | 450.1 | 0.1 | 449.4 | 0.2 | -0.8 | 0% | 0.0 | 11% |
| Modern Tax System | 90.0 | 65.0 | 100.9 | 86.0 | 10.9 | 12% | 21.0 | 32% |
| Debts and Payments | 37.4 | 27.4 | 38.1 | 28.3 | 0.7 | 2% | 0.9 | 3% |
| Digitalising Business Rates | 4.9 | 8.1 | 5.0 | 7.7 | 0.1 | 2% | -0.4 | -5% |
| Pensions Programme | 6.1 | 10.3 | 12.1 | 20.3 | 6.0 | 98% | 10.0 | 97% |
| Tax-Free Childcare | 37.7 | 0.0 | 37.7 | 0.0 | 0.0 | - | 0.0 | - |
| Help to Save | 15.4 | 0.0 | 15.4 | 0.0 | 0.0 | - | 0.0 | - |
| Fiscal Event Costs Policy Pot | 90.0 | 10.0 | 124.6 | 15.6 | 34.6 | 38% | 5.6 | 56% |
| Spend-to-Raise | 104.0 | 8.9 | 67.7 | 4.9 | -36.3 | -35% | -4.0 | -45% |
| Pilots | 7.2 | 5.0 | 11.7 | 4.0 | 4.5 | 63% | -1.0 | -21% |
| Official Developments Assistance | 7.9 | 0.0 | 7.5 | 0.0 | -0.4 | -5% | 0.0 | - |
| Research & Development | 0.0 | 2.0 | 0.0 | 2.0 | 0.0 | - | 0.0 | - |
| Sub-total | 1325.0 | 301.7 | 1455.2 | 490.1 | 130.2 | - | 188.4 | - |
| Depreciation (non-cash) | 846.5 | 0.0 | 541.2 | 0.0 | 305.3 | 56% | 0.0 | - |
| Total | 2171.5 | 301.7 | 1996.5 | 490.1 | 435.5 | - | 188.4 | - |
Changes to contingent liabilities
The following contingent liabilities are contained within [Part III: Note K of the Main Estimate.]
HMRC contingent liabilities
| Nature of Liability | £000 |
|---|---|
| Legal Claims - Costs that may be awarded should various legal cases in which HMRC is involved be determined against the department | 140,000 |
| Guaranteed Costs – possible liability where appointed liquidators have been guaranteed payment of their costs with a view to recovery of outstanding tax liabilities | 700 |
| Other – the department has a further number of contingent liabilities | 119,300 |
VOA contingent liabilities
| Nature of Liability | £000 |
|---|---|
| Legal claims - Costs that may be awarded should various legal cases in which VOA is involved be determined against it. | 720 |
These contingent liabilities have been held by the department for several years and reported within the Departmental Resource Accounts annually. They have been incurred in the ordinary course of administering the tax and customs system. HMRC has an established process in place to regularly review and monitor contingent liabilities.
3. Priorities and performance
3.1 How spending relates to objectives
HMRC’s planning and performance is structured around 5 current strategic objectives:
- collect the right tax and pay out the right financial support
- make it easy to get tax right and hard to bend or break the rules
- maintain taxpayers’ consent through fair treatment and protect society from harm
- make HMRC a great place to work
- support wider government economic aims through a resilient, agile tax administration system
The funding HMRC received in SR21 provides core services which enable the collection of tax revenue and the delivery of customer services. HMRC also use a significant proportion of this investment to fund transformation projects to modernise the way tax and customs is administered in line with the Government’s tax administration strategy ‘Building a trusted, modern tax administration’.
HMRC’s departmental finance systems are not structured to report costs and resources by strategic objective.
Measures of performance against each strategic objective
HMRC publish quarterly updates on performance against key performance indicators, and also cover these, and their commitments, within the performance section of the Annual Report and Accounts. In addition to this, HMRC publish monthly data on the use of digital services.
HMRC performance
In 2022 to 2023, HMRC collected £788.8 billion in tax receipts for the Exchequer – an increase of 10.2% on the previous year – and achieved a long-term reduction in the UK’s tax gap from 7.5% in 2005 to 2006 to 4.8% in 2021 to 2022 (the latest estimates available).
HMRC’s customer service strategy is digital-first - encouraging more customers to self-serve through GOV.UK or the HMRC App. HMRC trialled changes to customer service helplines over the last year but halted further planned changes in response to feedback. Recently announced additional funding will enable HMRC to meet the telephony performance standards that customers expect, while continuing to build a digital-first model of tax administration.
HMRC have focused on enhancing and expanding digital services via GOV.UK and the HMRC App. Satisfaction with HMRC digital services remains high: 83.1% to end of February 2023 to 2024. Whilst expanding the provision of digital services, HMRC will continue to listen to feedback from all stakeholders and recognise more needs to be done to ensure all taxpayers’ needs are met in encouraging greater use of their digital services.
In 2022 to 2023 significant improvement was made in the proportion of customer correspondence turned around within 15 working days, increasing to 72.7% from 45.5% in 2021 to 2022. Up to the end of February 2024, this had improved to 75.6% across 2023 to 2024, closer to HMRC’s 80% service standard. The proportion of callers wanting to speak to an adviser who were able to do so was 67.2% up to the end of February 2024 – a slight decline in performance from 71.1% across 2022 to 2023 and below our 85% service standard.
The issues affecting HMRC’s ability to meet service standards on telephony and correspondence include the impact of higher inflation on costs, growth in the number of customers in the tax system and an increase in the number of customers with complex tax affairs who need more support. Simplification, better guidance and improved options for self-serving online are all important in reducing telephony demand and enabling customer service advisers to focus on helping customers who still need to resolve issues by phone or post, but HMRC recognise that we need to introduce changes at a pace that works for all customers.
The debt balance at the end of 2023 to 2024 was £44.6 billion, a slight reduction from £45.9 billion at the end of 2022 to 2023.
HMRC promote good compliance by educating and supporting customers in their tax affairs; prevent non-compliance by making it easier for customers to get things right by improving policies, services and systems; and respond robustly to those who are carelessly or deliberately non-compliant, or who attack the tax system. Every year, HMRC collect and protect billions of pounds of tax revenue that would otherwise have been lost to the Exchequer through error, fraud or other forms of non-compliance. In 2022 to 2023, HMRC delivered £34 billion of compliance yield, an increase on the year before, with an increased level of compliance yield also expected in 2023 to2024.
HMRC are also reshaping the role of customs and aims to have a world-class customs system – one that uses technology, data and better coordination to reduce costs and friction for businesses and customers. Modernisation is integral to this and, in August 2023, HMRC reached an important milestone in moving to a single customs platform with 99.9% of import declarations submitted on the new Customs Declaration Service. HMRC are now focused on making sure the UK’s exporters make the move to the new system by 4 June 2024.
4. Major projects
HMRC currently has 13 live projects within the Government Major Projects Portfolio (GMPP). Details of 12 of those programmes were published in the 2023 GMPP Transparency Publication. For more information, please refer to that publication:
- Building our Future Locations Programme
- Northern Ireland Delivery Programme
- Making Tax Digital Programme
- Pensions Programme
- Protect Connect Programme
- Single Customer Account Programme
- Single Customs Platform Programme
- Single Trade Window Programme
- Technical Health Programme (formerly Enterprise Security Programme)
- Trader Support Service Programme
- Unique Customer Record Programme
- Unity Programme
Subsequent to the 2023 GMPP Transparency Publication 9 HMRC programmes have exited GMPP and 1 HMRC Programme has joined GMPP:
Leavers:
- Contact Engagement Programme
- Critical Platform Transformation Programme
- Data Protection Remediation Programme
- Debt Respite Programme
- Debt Transformation Programme
- Infrastructure Programme
- Our Future CDIO Programme (formerly Technology Sourcing Programme)
- Payments Programme
- Securing our Technical Future Programme
Joiner:
- Enterprise Tax Management Platform Programme
Details of this programme will be published in the 2024 GMPP Transparency Publication which is expected to be published in July 2024.
5. Accounting Officer Approval
This memorandum has been prepared according to the requirements and guidance set out by the House of Commons Scrutiny Unit, available on the Scrutiny Unit website.
The information in this Estimates Memorandum has been approved by myself as Departmental Accounting Officer.
Accounting Officer
First Permanent Secretary HM Revenue and Customs
11 July 2024
6. Annexes
6.1 Annex: Table A
See tables at Section 2.1 for a breakdown of DEL and AME funding changes.
6.2 Annex: Table B
HMRC 2024-2025 Main Estimate DEL (£ million)
| HMRC 2024-2025 Main Estimate DEL (£ million) | RDEL Admin | RDEL Prog | Total RDEL | CDEL | TDEL |
|---|---|---|---|---|---|
| Spending Review outcome | 1082.7 | 3987.4 | 5070.1 | 468.8 | 5538.9 |
Additional, new, money awarded since SR21: additional HMT funding
| RDEL Admin | RDEL Prog | Total RDEL | CDEL | TDEL | |
|---|---|---|---|---|---|
| Single Trade Window | 0.0 | 59.5 | 59.5 | 30.0 | 89.5 |
| Labour Markets Evaluation | 0.0 | 0.7 | 0.7 | 0.0 | 0.7 |
| Spend to Raise AS23 Funding | 0.0 | 15.7 | 15.7 | 0.0 | 15.7 |
| AS23 - Credit reference agency data | 0.0 | 0.0 | 0.0 | 0.7 | 0.7 |
| SB24 - Carbon Border Adjustment | 0.0 | 0.8 | 0.8 | 0.0 | 0.8 |
| SB24 - Vaping Products Duty | 0.0 | 3.4 | 3.4 | 5.4 | 8.8 |
| SB24 - Improving Agent Registration | 0.0 | 3.7 | 3.7 | 0.0 | 3.7 |
| SB24 - Crypto-Asset Reporting Framework | 0.0 | 0.8 | 0.8 | 0.0 | 0.8 |
| Additional, new, money awarded since SR21 sub-total | 0.0 | 84.6 | 84.6 | 36.2 | 120.7 |
Estimating, forecasting and reprofiling changes
| RDEL Admin | RDEL Prog | Total RDEL | CDEL | TDEL | |
|---|---|---|---|---|---|
| IFRS 16 | -26.6 | -46.8 | -73.4 | 1.8 | -71.6 |
| IFRS 16 Depreciation | 33.0 | 53.1 | 86.1 | 0.0 | 86.1 |
| Health and Social Care Levy Surrender | -10.0 | -12.6 | -22.6 | 0.0 | -22.6 |
| Depreciation budget adjustment | 5.7 | 371.8 | 377.6 | 0.0 | 377.6 |
| Estimating, forecasting and reprofiling changes sub-total | 2.1 | 365.6 | 367.7 | 1.8 | 369.5 |
Neutral funding changes between departments: OGD budget transfers
| RDEL Admin | RDEL Prog | Total RDEL | CDEL | TDEL | |
|---|---|---|---|---|---|
| Foreign, Commonwealth and Development Office (Incoming): EECAD Conflict, Stability & Security Fund (CSSF) portfolio | 0.0 | 0.1 | 0.1 | 0.0 | 0.1 |
| Foreign, Commonwealth and Development Office (Incoming): Common Platform Baseline transfer | 0.0 | 3.0 | 3.0 | 0.0 | 3.0 |
| Cabinet Office (Outgoing): Civil Service Live Contribution (From 23/24 Heads of Place) | -0.2 | 0.0 | -0.2 | 0.0 | -0.2 |
| Cabinet Office (Outgoing): CDIO contribution to ROSA infrastructure improvements | 0.0 | 0.0 | 0.0 | -0.5 | -0.5 |
| Department For Work And Pensions (Incoming): Universal Credit | 0.0 | 33.6 | 33.6 | 1.2 | 34.9 |
| Neutral funding changes between departments sub-total | -0.2 | 36.8 | 36.5 | 0.7 | 37.2 |
2024 to 2025 Main Estimates DEL
| RDEL Admin | RDEL Prog | Total RDEL | CDEL | TDEL | |
|---|---|---|---|---|---|
| 2024-2025 Main Estimates DEL | 1,084.6 | 4,474.3 | 5,558.9 | 507.5 | 6,066.4 |
Note: numbers may not sum due to rounding