HMRC’s expects to spend £4.8bn in the current 2021/22 year, £4.2bn revenue expenditure and £0.6bn capital. These figures are expected to peak at £5.2bn and £0.7bn in 2022/23 before falling back to £4.7bn and £0.5bn by 2024/25.
These figures represent an average annual real term growth of 1.2% in revenue expenditure over the period 2021/22 to 2024/25. Capital expenditure decreases by 9.1% over the same period but that is largely due to a significant investment in the UK’s departure from the EU and IT infrastructure in the 2021/22 baseline year.
HMRC’s Spending Review 2021 bid, and the settlement it received, focused on three key areas:
- Maintaining the delivery of core services. This includes increased funding for compliance activity and for improvement in customer experience standards.
- A resilient, responsive, modern tax system. This includes funding on HMRC’s IT estate to upgrade legacy systems and ensure systems and data remain secure, as well as HMRC’s modernisation agenda.
- A secure and compliant border. This provides the funding to facilitate trade and deliver a secure and effective border, delivering the ambition set out in the 2025 Border Strategy.
The Budget documents highlight the following areas that will receive additional funding:
- £292m across three years for more resources to tackle the tax gap.
- £55m in 2022/23 for the Taxpayer Protection Taskforce announced at Spring Budget 2021 to tackle abuse of COVID-19 support schemes.
- The extension of the Making Tax Digital programme.
- £136m over 2022/23 to 2024/25 to deliver the Single Customer Record and Account.
- £468m over 2022/23 to 2024/25, building on £98m allocated in 2021/22 , to reduce the risk of system failures, enhance HMRC’s ability to defend against cyberattacks and support the continued digitalisation and modernisation of the tax system.
- £277m over 2022/23 to 2024/25 to transform the way HMRC procures IT services.
- £838m over 2022/23 to 2024/25 to complete the delivery of critical customs IT, including the Customs Declaration Service.
- £107m in 2022/23 for the Trader Support Service, which helps traders move goods into Northern Ireland.
- £500m over 2022/23 to 2024/25 to allow the Valuation Office Agency to upgrade digital capabilities and to support more frequent revaluations in England.
HMRC advises that it still has some decisions to make around how and where it prioritises some of the funding, so isn’t yet in a position to share the full detail.
The Tax Faculty will be engaging with HMRC and seeking to understand more about what the settlement will mean for HMRC’s service levels and the development of digital services.
The Tax Faculty reflected on the Chancellor's announcements in this essential webinar. Freely available, watch the recording to find out what the Autumn Budget 2021 could mean for you and your clients.
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Autumn Budget 2021
On 27 October 2021, alongside the publication of the government's comprehensive spending review, the Chancellor will announce the details of his second budget of 2021. Read ICAEW's analysis and reaction.Read
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Building a better tax system for the UK
As HMRC embarks on a 10-year review of tax administration, ICAEW examines the potential opportunities and challenges to reforming the UK's tax system to be fit for a digital future.