HMRC's digital services are to receive £200m of government investment in a move expected to save £51m year on administrative costs.
The investment will enable two million people to carry out transactions online by 2015-16, such as self-serving their repayments, view tax codes, update personal details online and report additional sources of income, said HMRC.
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Nearly five million small businesses will also be able to access their accounts on a single personalised homepage; get direct access to all the online transactions relevant to them; view a personalised tax calendar with digital alerts; and complete more transactions online in the next three years.
HMRC chief executive Lin Homer said: “I am delighted that we have secured this investment, which will enable us transform our increasingly popular digital services and build a groundbreaking digital tax service. We are committed to doing business with our customers in the way they want to do it.”
It follows plans by the department to double its number of software developers to 600 in moves to reduce its reliance on large outsourcers such as Capgemini and its existing Aspire contract.
The plans were announced in the Investing in Britain's future plan, which also saw investment go to The Criminal Justice System (CJS). The government said it will invest £160m between 2013-14 and 2015-16 in digital technology to improve collaboration and create a fully integrated system based around a common digital platform from police station to courtroom.
It also committed £70m to create courtrooms where all parties can work from Wi-Fi enabled tablets and a single information management system allowing case information to be shared across the CJS.