Key takeaways

  • HMRC answered 83.8% of calls in April–September 2025, up from 71.5% a year earlier, with average waits down to about 13.5 minutes.
  • The Financial Times reported in July 2026 that lower phone waits have boosted HMRC, but the digital shift underpinning the overhaul is the harder test.
  • Making Tax Digital for Income Tax began phasing in from April 2026 for those earning over £50,000, extending to £30,000 in 2027 and £20,000 in 2028.
  • HMRC wants at least 90% of customer interactions to be digital by 2029-30, up from roughly 76% today.
  • The tax gap rose to 6.4%, or £59.2bn, in 2024-25, keeping pressure on HMRC to modernise while collecting more.

For much of the past three years, the sound most associated with Britain’s tax authority was hold music. Callers to HM Revenue and Customs waited, on average, well over 20 minutes to reach an adviser; millions never got through at all; and a parade of critical reports from Parliament’s spending watchdogs turned “HMRC customer service” into a byword for public-sector dysfunction. In July 2026, the picture looks meaningfully different. The Financial Times, examining what the overhaul of HMRC has delivered so far, reported that a reduction in phone waiting times has given the department a genuine boost—but cautioned that the harder test is the digital shift that underpins the whole programme.

That framing is the right one. The recovery in the call centres is real and measurable. But it is also, in a sense, the easy part: recruiting staff and answering phones is a problem HMRC knows how to solve when money is available. The far more consequential ambition—moving tens of millions of taxpayers off the phone and onto digital services, and re-plumbing income tax reporting through Making Tax Digital—is only now beginning in earnest. If it works, HMRC will be a leaner, faster and more resilient organisation. If it stumbles, the department risks recreating the very service crisis it has just clawed its way out of, only online. This article examines how the HMRC overhaul reached this point, what has actually improved, and why the digital transformation remains the test that matters most.

The service problem HMRC had to fix

The scale of HMRC’s customer-service collapse was documented in unusually blunt terms by the National Audit Office (NAO). In its May 2024 report, the spending watchdog found that taxpayers and their agents had cumulatively spent the equivalent of 798 years on hold in 2022-23—more than double the figure for 2019-20. Average call waiting times reached roughly 23 minutes in the first 11 months of 2023-24, against about five minutes in 2018-19. HMRC answered around 20.5 million of 38 million call attempts in 2022-23, and its advisers handled 22% fewer calls than they had four years earlier even as demand climbed.

The NAO’s most damning judgement concerned the nature of that demand. It estimated that around 72% of calls in 2023-24 were “failure demand”—contacts driven by errors, delays or complexity that better systems should have prevented. Correspondence was little better: about one million items of post were outstanding and awaiting a reply in February 2024. Gareth Davies, the NAO’s head, concluded that “HMRC’s telephone and correspondence services have been below its target service levels for too long.”

Parliament’s Public Accounts Committee (PAC) reached similar conclusions. In a February 2024 report, it found that 62.7% of callers waited more than 10 minutes to be answered in 2022-23, up from 46.3% the previous year, and described customer service as having reached an “all-time low.” The then chair, Dame Meg Hillier, noted witheringly that “almost eight years have passed since our Committee challenged HMRC over its telephone lines’ holding message being one of the most streamed pieces of music in the country.” The committee also flagged a steep fall in criminal prosecutions for tax offences and a shortfall against compliance-yield targets—signs that the strain ran deeper than the call queues alone.

The low point came in the spring of 2024, when HMRC announced plans to close or sharply restrict several major helplines—including, for part of the year, the self-assessment line—and push callers towards online services. The backlash was immediate and forced a rapid reversal within a day. It crystallised the central tension of the overhaul: HMRC wanted taxpayers to go digital, but it was trying to withdraw the phone lines before the digital alternatives were good enough to carry the load.

What has actually improved

Two years on, the operational numbers tell a story of recovery. HMRC’s own performance data show that it answered 83.8% of adviser-attempted calls in the first half of 2025-26 (April to September 2025), up from 71.5% across the whole of 2024-25—an improvement of more than 12 percentage points. Average waiting times fell to about 13 minutes 30 seconds over the same period, down from roughly 18 minutes 38 seconds a year earlier: a reduction of more than five minutes. The department met its baseline target of answering 85% of calls in October 2024 for the first time after 39 consecutive months of underperformance, and has broadly held closer to that mark since.

The turnaround was funded rather than conjured. HMRC received additional money to stabilise its helplines—including an in-year injection in 2024—and the June 2025 Spending Review provided further investment earmarked partly for digital services and day-to-day performance. Lord Livermore, financial secretary to the Treasury, said in late 2025 that “improving day-to-day performance is a key priority for HMRC,” and the figures suggest the extra resources bought a real, if partial, recovery. Even the headline improvements come with caveats: taxpayers still spent the equivalent of hundreds of years on hold in aggregate, and post-handling times have at points lengthened even as the phones improved, according to analysis from the Institute of Chartered Accountants in England and Wales (ICAEW).

This is the boost the Financial Times identified. It matters politically as well as practically, because it buys HMRC credibility to pursue the more ambitious changes. But it is worth being clear-eyed about what the recovery represents. Answering more calls faster is a return to something like normal service, achieved largely by spending money on people. It does not, on its own, reduce the underlying demand—the errors, delays and complexity that generate so many of those calls in the first place. That is what the digital transformation is supposed to address, and it is where the harder work begins.

Making Tax Digital and the digital shift

At the centre of the overhaul sits “digital by default”—the long-standing strategy of making online self-service the primary way taxpayers interact with HMRC, with phone and post reserved for those who genuinely need them or cannot use digital channels. The most concrete expression of that strategy is Making Tax Digital (MTD), the programme requiring taxpayers to keep digital records and report to HMRC through compatible software.

MTD for VAT is already fully in force; VAT-registered businesses have kept digital records and filed through the system for several years, and it is now largely routine. The far bigger and more contentious phase is Making Tax Digital for Income Tax (sometimes styled MTD for Income Tax Self Assessment), which began its phased rollout from April 2026. Under the timetable set out on GOV.UK, sole traders and landlords with qualifying income above £50,000 came into the regime first, from 6 April 2026. The threshold falls to £30,000 from April 2027 and to £20,000 from April 2028, progressively drawing in millions of smaller businesses and buy-to-let landlords.

The shift is more than a change of filing website. Those in scope must keep digital records and, in place of a single annual return, submit quarterly updates of income and expenses through MTD-compatible software, followed by a year-end finalisation. As the ICAEW and the Chartered Institute of Taxation (CIOT) have both stressed in their guidance, this represents the most significant change to personal tax administration in a generation, and one that lands on precisely the population—self-employed workers and small landlords—least likely to have sophisticated accounting systems or professional agents.

MTD is only one strand of a broader plan. HMRC’s Transformation Roadmap, published in 2025, sets the department’s ambition for at least 90% of customer interactions to be digital by 2029-30, up from roughly 76% today. The roadmap commits HMRC to rolling out a new online service for all of its roughly 35 million PAYE taxpayers, expanding self-assessment registration online, pre-populating returns with data such as Child Benefit, and digitalising services from Inheritance Tax to National Insurance refunds. Paper correspondence is due to be cut back sharply, a change HMRC expects to save around £50m a year from 2028-29. The logic is coherent: if more taxpayers can resolve queries and file digitally, failure demand falls, phone lines free up, and the department can run with fewer staff. The question is whether delivery matches the design.

The risks of the transformation

The central risk is one of sequencing—the same mistake that produced the 2024 helpline debacle, scaled up. Digital services only reduce phone demand if they work well enough that taxpayers trust them and can complete tasks without falling back to a human. The PAC has repeatedly warned that HMRC’s confidence in its own online offerings has not always matched the experience of taxpayers and agents, who reported clunky journeys, gaps in functionality and problems that could only be resolved by phone. If HMRC withdraws traditional channels faster than it improves digital ones, it risks stranding taxpayers between the two.

MTD for Income Tax carries a specific delivery risk. The programme has already been delayed and rescoped several times since first being announced, and the population now being brought in is diverse and often unrepresented. Quarterly digital reporting imposes real costs—software subscriptions, time, and a learning curve—on small businesses and landlords, some of whom keep records on paper or spreadsheets. Professional bodies including the CIOT have questioned whether the administrative burden is proportionate for those at the lower income thresholds, and whether HMRC’s support and software ecosystem will be ready as the £30,000 and £20,000 tiers arrive in 2027 and 2028. A poorly handled rollout could generate a fresh wave of failure demand, undoing the call-centre gains.

There is also a resourcing paradox. Part of the business case for digital transformation is that it allows HMRC to operate with fewer staff over time; the NAO noted the department was expected to reduce headcount even as service quality was under strain. Yet HMRC is simultaneously being asked to expand compliance work to close the tax gap. The Transformation Roadmap commits to recruiting several thousand additional compliance staff, and the government has allocated around £1.7bn to fund roughly 7,900 extra HMRC compliance roles, with measures announced since the Autumn 2024 Budget projected to raise about £10bn a year by 2029-30. Balancing efficiency-driven cuts in service functions against expansion in compliance—while transforming the technology beneath both—is a genuinely difficult management challenge.

Finally, there is the tax gap itself. HMRC’s latest official estimate put the gap at 6.4% of theoretical liabilities in 2024-25, equivalent to £59.2bn, up from a revised 6.0% (£52.8bn) the year before. Small businesses account for about 62% of the total. A modernised, digital HMRC is meant to help close that gap by reducing error and making non-compliance harder to hide. But if the digital transition itself introduces confusion and mistakes—particularly among the small-business population that already drives most of the gap—it could, at least in the short term, work against the very objective it is designed to serve.

What the overhaul means for taxpayers, businesses and agents

For ordinary PAYE taxpayers, the near-term effect of the overhaul should be positive and largely invisible: shorter waits when they do need to call, a better online personal tax account, and more tasks—checking a tax code, reporting a change, claiming a refund—that can be completed without picking up the phone. The roll-out of an improved online service for all 35 million PAYE customers is central to that promise.

For the self-employed and landlords, the changes are more demanding. Those above the £50,000 threshold are already navigating MTD for Income Tax in 2026, and each subsequent April draws in more people at lower incomes. In practice this means adopting compatible software, keeping records digitally throughout the year, and filing quarterly rather than annually. For well-organised businesses the transition may be manageable, even beneficial, as more frequent reporting can improve visibility of tax owed. For others it is a significant new burden, and the quality of HMRC’s guidance, software market and support lines during the transition will determine how painful it proves.

For tax agents and accountants, the overhaul is double-edged. The historic collapse in HMRC service hit agents hard, forcing them to spend unbillable hours on hold chasing routine matters; the recovery in call handling and the promise of better digital agent services are therefore welcome. But MTD for Income Tax multiplies the compliance touchpoints for every affected client—from one annual return to several submissions a year—reshaping workflows and pricing. Professional bodies such as ICAEW and CIOT have pressed HMRC for stable timelines, robust software and a properly functioning agent dedicated line so that the people who file most of Britain’s tax returns are not left absorbing the friction of the transition.

Historical context: a long road to reform

The current overhaul is best understood as the latest chapter in a decade-long effort to modernise a department that collects the money the state runs on. HMRC gathered a record £865.2bn in 2024-25, up from £814.0bn in 2022-23, and does so with a workforce and IT estate that have been under near-constant pressure to do more with less. “Digital by default” is not new; it has been government policy in various forms since the early 2010s, and MTD for VAT was the first large-scale proof that mandatory digital reporting could work at population scale.

What is new is the alignment of a credible service recovery with a formal, published Transformation Roadmap and a hard MTD timetable that has finally begun to bite. Previous attempts at reform were undermined by the very service crisis they were meant to cure: HMRC could not credibly push people online while its digital services and support were failing them. The stabilisation of the phone lines since late 2024 changes that calculus. For the first time in several years, HMRC is attempting its digital leap from a position of relative operational stability rather than crisis—which is precisely why the coming period is the real test.

Opportunities, challenges and material risks

The opportunity is substantial. A genuinely digital HMRC could cut failure demand at source, redeploy staff from answering repetitive calls to complex compliance and support, save tens of millions in paper and postage, and give taxpayers a faster, more transparent experience. Done well, MTD could nudge the tax gap down by reducing the errors that account for a large share of it, and give both taxpayers and HMRC a clearer, more real-time view of what is owed.

The challenges are equally clear. Delivery risk on large government IT programmes is notoriously high; MTD’s own history of delays is a cautionary tale. The transition period is where danger concentrates—if digital services are withdrawn or de-emphasised before they are demonstrably reliable, service quality could regress. The population being brought into MTD is the least digitally equipped, and the support burden during 2026-28 will be heavy. And the whole exercise must be delivered while HMRC simultaneously trims service headcount and expands compliance, against a backdrop of a tax gap that has widened rather than narrowed.

The material risks worth watching over the next 18 months are therefore threefold: whether call-handling gains hold as extra funding is absorbed and paper channels shrink; whether the £30,000 MTD threshold in April 2027 lands smoothly or generates a spike in errors and demand; and whether HMRC’s digital services mature fast enough to justify the shift away from phone and post. On each, the evidence so far is encouraging but incomplete.

What happens next

The immediate milestones are the bedding-in of MTD for Income Tax through the 2026-27 tax year, the first full cycle of quarterly updates for those above £50,000, and preparation for the £30,000 cohort in April 2027. HMRC’s quarterly performance updates will show whether the improvement in call answering and waiting times is durable or whether it slips as helpline funding tightens and paper correspondence is scaled back. The rollout of the new PAYE online service to some 35 million customers will be an early, large-scale indicator of whether HMRC’s digital delivery can match its ambitions.

Watchdog scrutiny will continue. Both the NAO and the Public Accounts Committee have signalled they will keep tracking whether digital investment translates into better outcomes rather than simply displacing demand from phones to a struggling online estate. Progress against the tax gap—next updated in HMRC’s annual “Measuring tax gaps” statistics—will show whether the compliance expansion and modernisation are beginning to bite. And the 90%-digital-by-2029-30 target provides a clear yardstick against which the trajectory can be measured year by year.

Conclusion

HMRC’s overhaul has passed its first test. Waiting times are down, call answer rates are up, and the department has escaped the acute service crisis that dominated the headlines in 2023 and 2024. The Financial Times was right to credit that recovery—and right, too, to note that it is not the hard part. The hard part is the digital transformation: moving tens of millions of taxpayers to online self-service, delivering Making Tax Digital for Income Tax across successively lower income thresholds, and doing so without recreating the failures of the past in a new medium.

The stakes are high because HMRC is not an ordinary public service; it funds everything else. A successful transformation would make the tax system faster, cheaper and more resilient, and could help chip away at a tax gap that stubbornly widened to £59.2bn in 2024-25. A botched one would squander the credibility just regained and land the burden on the least-equipped taxpayers. For now, HMRC has earned a measure of goodwill by fixing the phones. Whether it can convert that into a durable digital overhaul is the question that will define the next several years—and it remains, firmly, still ahead.