HMRC stands for His Majesty’s Revenue and Customs, the UK government department responsible for collecting taxes, enforcing tax law, and administering certain state benefits. In the 2024–2025 fiscal year, it collected a record £875.9 billion in revenue, funding public services from the NHS to defence and education.1GOV.UK Publishing. HMRC Annual Report and Accounts 2024 to 2025 If you live or earn income in the UK, HMRC is the agency you deal with for income tax, National Insurance, VAT, customs, and a range of other obligations.
Why the Name Changed From Her Majesty’s to His Majesty’s
You will see both versions of the name in circulation. Following the accession of King Charles III in September 2022, the department’s formal name changed from “Her Majesty’s Revenue and Customs” to “His Majesty’s Revenue and Customs.” The acronym stayed the same, which is why HMRC is the label that has stuck through the change of monarch. Older documents, letters, and web pages still carry the “Her Majesty’s” wording, and they refer to the same department.
How HMRC Was Formed
HMRC came into existence in April 2005, when the government merged two older departments: the Inland Revenue and Her Majesty’s Customs and Excise. The Inland Revenue had handled direct taxes like income tax and corporation tax. Customs and Excise had managed indirect taxes such as VAT, along with border control and anti-smuggling work.2legislation.gov.uk. Commissioners for Revenue and Customs Act 2005 – Explanatory Notes That is why the department’s name pairs the two words: it inherited both sides of the tax system in one body.
The merged department operates under the Commissioners for Revenue and Customs Act 2005, which sets out its legal powers and structure.3legislation.gov.uk. Commissioners for Revenue and Customs Act 2005 – Contents HMRC is classified as a non-ministerial department, meaning it carries out its functions independently of direct ministerial control while remaining accountable to the Chancellor of the Exchequer and to Parliament.
What HMRC Actually Does
HMRC’s remit is wide. It runs the main taxes that fund central government and also delivers a handful of benefits directly to households.
Income Tax and National Insurance
Income tax is HMRC’s single largest revenue stream. For the 2026–2027 tax year, the personal allowance remains frozen at £12,570, so you pay no income tax on the first £12,570 you earn.4GOV.UK. Income Tax Personal Allowance and the Basic Rate Limit From 6 April 2026 to 5 April 2028 Above that, income is taxed in bands at 20%, 40%, and 45% in England, Wales, and Northern Ireland. Scotland sets its own rates and bands.5GOV.UK. Rates and Thresholds for Employers 2026 to 2027
Alongside income tax, HMRC collects National Insurance contributions, which fund the state pension, statutory sick pay, and other social security benefits. Employees currently pay 8% on earnings above £12,570 a year, and employers pay 15% on wages above a lower secondary threshold of £5,000.6GOV.UK. Rates and Thresholds for Employers 2025 to 2026
Corporation Tax
Companies operating in the UK pay corporation tax on their taxable profits. UK-resident companies owe it on all worldwide profits, and foreign companies with a UK branch pay it on profits earned through their UK activities.7GOV.UK. Corporation Tax – Overview The main rate is 25% for profits above £250,000 and 19% for profits below £50,000, with a tapered rate in between.8GOV.UK. Rates and Allowances for Corporation Tax
VAT, Customs, and Excise
Value Added Tax is the UK’s main consumption tax. The standard rate is 20%, most food and children’s clothing are zero-rated, and a reduced rate of 5% covers a narrower set of items including domestic energy.9GOV.UK. VAT Rates Businesses above a certain turnover threshold have to register, charge VAT on sales, and submit regular returns.
HMRC also collects customs duties on goods imported from outside the UK. Tariffs apply to excise goods and to other imports worth more than £135.10GOV.UK. Tax and Customs for Goods Sent From Abroad Excise duties are separate charges on specific products like alcohol, tobacco, and fuel. Border enforcement, including work to prevent smuggling of drugs, firearms, and other prohibited goods, sits with HMRC as well.11GOV.UK Publishing. New Customs Information
Stamp Duty Land Tax
When you buy residential property in England or Northern Ireland above a certain price, HMRC collects Stamp Duty Land Tax on the portion of the price falling into each band, running from 0% up to 12% on values above £1.5 million. Higher rates apply to additional properties and to purchases by non-UK residents. Scotland and Wales have their own property transaction taxes administered separately.12GOV.UK. Stamp Duty Land Tax – Residential Property Rates
Benefits HMRC Runs
HMRC’s role goes beyond collection. The department manages Child Benefit, the regular payment made to anyone responsible for raising a child, and you can claim, track payments, and update your details through HMRC’s online services or the HMRC app.13GOV.UK. Child Benefit – How It Works
Working Tax Credit and Child Tax Credit used to sit with HMRC too, but those schemes ended on 5 April 2025 and have been replaced by Universal Credit, which is managed by the Department for Work and Pensions.14GOV.UK. Tax Credits Ended on 5 April 2025 If you previously received tax credits, you cannot make a new claim and should check your eligibility for Universal Credit instead.
How You Actually Deal With HMRC
Most employees never file a tax return. HMRC collects income tax through Pay As You Earn (PAYE), where your employer deducts tax from each payslip before you receive your wages. Your tax code tells your employer how much to withhold, taking into account your personal allowance and any other adjustments.15GOV.UK. How You Pay Income Tax National Insurance is deducted through the same system.
If your tax affairs go beyond a standard PAYE salary, you likely need to file a Self Assessment return. This applies to the self-employed, company directors, landlords with rental income, and anyone with significant investment income or capital gains. The UK tax year runs from 6 April to 5 April, and for online returns the filing and payment deadline is 31 January following the tax year end.16GOV.UK. Self Assessment Tax Returns – Deadlines
Most day-to-day contact happens online. By signing in through Government Gateway, you can reach a personal tax account covering your tax code, Self Assessment returns, and payment history, plus a business tax account for VAT, PAYE, corporation tax, and the Construction Industry Scheme.17GOV.UK. HMRC Online Services – Sign In or Set Up an Account The HMRC app offers similar functionality on your phone. For anything the online services cannot handle, GOV.UK publishes specific phone numbers and postal addresses for each type of enquiry.
HMRC and US Citizens Living in the UK
If you are a US citizen or green card holder living in the UK, HMRC’s role intersects with your US tax obligations in one specific way. Under the Foreign Account Tax Compliance Act, UK banks, investment firms, brokers, and certain insurance companies report information about accounts held by US taxpayers, and HMRC facilitates that exchange under a bilateral agreement with the United States.18Internal Revenue Service. Summary of FATCA Reporting for US Taxpayers The data flows happen automatically, so there is nothing to do on the UK side, but you still need to meet your US filing obligations separately. HMRC does not administer or file your US return.