HMRC Transformation Roadmap: Year-One Progress on Digital Tax and Compliance

On 2 July 2026 HMRC published its first-year progress update against the five-year Transformation Roadmap launched in July 2025. The report sets out measurable advances in digital service uptake, compliance yield, Making Tax Digital for Income Tax rollout, and integration of the Valuation Office Agency.

For UK sole traders, landlords, and small employers, the update confirms that digital-first tax administration is no longer a future ambition — it is the operating default, with mandatory MTD for ITSA live from April 2026 and further threshold reductions scheduled through 2028.

Seventy-eight per cent of HMRC customer interactions now take place through digital or automated channels, up from around 65% five years ago. The department targets at least 90% digital interaction by 2030.

The HMRC app reached 7.6 million unique users in 2025–26, with 2.8 million new users in the year. Self Assessment payments via the app in January 2026 totalled £818.8 million, up from £499 million in January 2025. Nearly 20 million people use Personal Tax Accounts and 10.8 million businesses use Business Tax Accounts.

Customer satisfaction across contact channels averages around 80%, and call waiting times have fallen as capacity now matches demand. HMRC is investing in a modern Contact Centre as a Service platform and Enterprise CRM to join up service across channels.

April 2026 marked the biggest ITSA modernisation in a generation: sole traders and landlords with qualifying gross income above £50,000 must keep digital records and submit quarterly updates. Over 350,000 businesses had signed up by the progress update, in line with HMRC forecasts.

Thresholds step down to £30,000 from April 2027 and £20,000 from April 2028 — confirmed in the Spring Statement 2026. Software providers, agents, and taxpayers co-designed the service; HMRC Assist nudges are built into MTD workflows to reduce error.

If your 2024–25 Self Assessment showed qualifying income above £50,000 and you have not signed up, treat compliance as urgent — penalties under the new MTD regime apply from the 2026–27 tax year.

HMRC collected and protected a record £48 billion in compliance yield in 2024–25 — tax that would otherwise have gone unpaid. The 2025–26 target is £50.4 billion, with delivery reported in the Annual Report and Accounts.

More than 1,600 additional compliance caseworkers joined in 2025–26, surpassing recruitment targets. HMRC is deploying AI tools including Microsoft Copilot to 28,000 colleagues (scaling toward 50,000 in 2026), an AI digital assistant with 6.3 million interactions in 2025–26, and automation to triage complaints and summarise calls.

Government measures announced since Autumn Budget 2024 are expected to raise a further £10 billion annually by 2029–30 toward closing the tax gap — the 6.4% (£59.2 billion) estimate for 2024–25 underscores why enforcement investment continues alongside service modernisation.

The Valuation Office Agency joined HMRC in April 2026, aligning property valuation transformation with the wider digital-first programme. Model-assisted valuations and the Valuation Operating System give HMRC a platform to modernise business rates and council tax support infrastructure.

Sole traders and landlords inside the first MTD cohort should confirm compatible software, quarterly update calendars, and agent authorisations before the first mandated submission window. Employers should monitor parallel consultations on mandatory Direct Debit for PAYE and VAT.

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