HMRC Annual Report 2025–26: £966.4bn Tax Revenues and Record £50.2bn Compliance Yield

On 9 July 2026 HM Revenue & Customs published its annual report and accounts for 2025–26, covering performance to 31 March 2026. The headline figures — £966.4 billion in tax revenues and £50.2 billion in compliance yield — set the fiscal baseline as the UK enters 2026–27 with employer NIC changes, Making Tax Digital for Income Tax, and Pillar Two minimum tax filings all in flight.

For UK businesses and tax agents, the report is more than a scorecard. It confirms HMRC's enforcement capacity, digital-first strategy, and customer service recovery — all of which shape how quickly enquiries resolve, how debt is collected, and how much friction sole traders face when filing.

HMRC raised £966.4 billion in tax revenues in 2025–26, an increase of £90.4 billion on the previous year. Compliance yield — tax protected or recovered through HMRC intervention — reached £50.2 billion, the first time the department has exceeded £50 billion in a single year.

The compliance yield target was £50.4 billion, so HMRC narrowly missed by £200 million. ICAEW noted the department exceeded its target in two of the three prior years, producing net overperformance of £1.9 billion across 2022–23 to 2024–25.

TaxWatch analysis highlights that 41.8% of 2025–26 compliance yield came from upstream activity — closing loopholes, promoting compliance, and preventing non-compliance before it occurs — up from 23.9% in 2019–20. Cash expected from compliance investigations fell to £12.1 billion from £14.2 billion, reflecting a shift toward deterrence over late recovery.

Seventy-eight percent of customer interactions were digital in 2025–26, up from 65% five years ago and on track toward HMRC's 90% target by 2030. The HMRC app reached 7.6 million users — a 28.6% increase — and ranked as the number one free finance app on both the App Store and Google Play for the first time.

January 2026 Self Assessment payments via the app totalled £818.8 million, up 64% year-on-year. Telephone performance met the 85.1% answered-calls target for the first time since 2017–18, with average wait times halving to below 10 minutes by March 2026.

Making Tax Digital for Income Tax launched in April 2026 for sole traders and landlords earning over £50,000, with more than 180,000 customers signed up by end-March. HMRC appointed its first Chief AI Officer in April 2026; AI and advanced analytics protected or recovered £10 billion in tax during the year.

HMRC resolved almost £102 billion of tax debt in 2025–26, up 5.3%. Tax debt as a proportion of receipts is forecast to fall from 4.7% in 2025–26 to between 3% and 4% by 2029–30 under the updated Debt Strategy published in 2025.

The department blocked 23.35 billion potential IT security threats and took down over 26,000 scam websites and social media accounts impersonating HMRC. The Fraud Prevention Centre, established after organised criminals accessed PAYE services using stolen personal data, now operates across tax regimes including VAT repayment fraud containment.

Compliance headcount grew by more than 2,100 since Autumn Budget 2024, ahead of plan to add 5,500 frontline compliance officers by 2030. The annual report signals continued investment in enquiry capacity even as upstream yield grows.

Budget cash-flow models using post-April 2025 employer NIC rates and strong PAYE receipt trends — HMRC's in-year collection focus will intensify alongside consultations on mandatory Direct Debit and ITSA timely payments.

Ensure MTD ITSA digital records are live if you are in scope for 2026–27 quarterly reporting; the annual report confirms HMRC will scale digital enforcement as sign-ups grow toward the August 2026 first deadline.

FinnAccountings reconciles PAYE, VAT, and Self Assessment liabilities against your ledger in real time — start a free trial to stay ahead of HMRC's expanding digital compliance and debt recovery tools.