On 21 July, alongside draft legislation for a number of new tax policies, the Government published HMRC’s Transformation Roadmap. 

This document is intended to set out the next steps in the development of HMRC’s systems and processes, with an overarching goal that 90% of all interactions with HMRC should be carried out digitally by 2030.

While much of the roadmap is aimed at increasing digital routes for individual taxpayers, there are many aspects relevant to employers and businesses.

Employment taxes

The most relevant measure for employers is confirmation of HMRC’s commitment to changing the system for reporting employee benefits. From 6 April 2027, employers will be required to report Income Tax and Class 1A National Insurance contributions for most benefits in kind in real time, rather than reporting benefits annually via the P11D process. This is often referred to as ‘payrolling’ of benefits, and was originally due to be introduced by April 2026, until a deferral was announced this April.

The move to ‘payrolling’ is intended to benefit around 3.5 million employees, who currently pay tax on their benefits in arrears through adjustments to their tax codes. However, it brings with it complexities for employers, including the need for new systems and processes. A further consultation on the details of the new measures is expected in Autumn 2025. 

Corporation Tax

The headline announcement is that HMRC do not intend to bring in Making Tax Digital (MTD) for Corporation Tax. The ATT welcomes this announcement. If introduced, MTD for Corporation Tax would have required companies to use compatible software to keep digital records and file quarterly updates of their income and expenses with HMRC.

Instead, HMRC aims to modernise services for Corporation Tax by focusing on improvements to the existing system, which is now outdated. The roadmap says that HMRC will “ensure its continuing functionality and security” as plans are made to design a new, more robust system.  

Other business measures

Businesses, as well as individuals, can expect to see many more ‘nudges and prompts’ in the coming years as HMRC try to improve compliance by providing more guidance to taxpayers during the process of submitting a return. The aim is to reduce the need for HMRC to make enquiries after a return has been submitted. HMRC will use information from third parties, as well as AI, to deliver prompts to taxpayers completing Corporation Tax, VAT and Self-Assessment returns.

HMRC also hope that increasing the use of e-invoicing will help to reduce errors and costs for businesses. E-invoicing involves the digital exchange of invoice information directly between buyers and suppliers and is currently voluntary. The Government have recently consulted on plans to standardise and increase adoption of e-invoicing.

For businesses involved in importing and exporting goods to and from the UK, HMRC intend to add additional features to the Customs Declaration Service (CDS) and make improvements in 2025 to the customs Temporary Admission procedure, which relieves import duties for eligible goods imported temporarily. These will extend and simplify the time limits for some goods, remove some restrictions on who can use the procedure and how goods can be used.

What about employees?

For employees, the headline announcement is the new, online service for PAYE taxpayers, designed to make it easier to check and update their income, allowances, reliefs, and expenses. This service is already live for some taxpayers, with 50% of the population already having access through their Personal Tax Account on a trial basis. The plan is to expand the features to all 35 million PAYE taxpayers during the 2025-26 tax year.

Employees should also soon see improvements to how to claim relief for expenses, as HMRC use more pre-population, and allow employees to upload proof of their expenses claims.

Summary

Much of the content of this roadmap is welcome, with a range of potential benefits from improved systems for many different groups of taxpayers. However, the current roadmap does not always set out when these new measures will be delivered. Hopefully, as HMRC’s plans develop, a more detailed timeline of changes over the coming years can be provided.

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.  

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