HMRC stands for His Majesty’s Revenue and Customs. It is the UK government department that collects taxes, enforces tax law, and pays out certain state benefits. In the 2024–2025 fiscal year, HMRC collected a record £875.9 billion in revenue, money that funds the National Health Service, defence, education, and the rest of public spending.1GOV.UK Publishing. HMRC Annual Report and Accounts 2024 to 2025 If you live or earn money in the UK, HMRC is the agency behind your income tax, National Insurance, VAT, and most other taxes you encounter.
What the Letters Mean and Why They Changed
The acronym breaks down as:
- H — His (previously Her)
- M — Majesty’s
- R — Revenue
- C — Customs
Until September 2022, the department was called Her Majesty’s Revenue and Customs, under Queen Elizabeth II. Following the accession of King Charles III, the formal name changed to His Majesty’s Revenue and Customs. The acronym stayed the same, which is why you will still see “HMRC” on every letter, form, and website. Older documents using “Her Majesty’s” refer to the same department.
What HMRC Does
HMRC has two broad jobs: collecting what the government is owed, and paying out a handful of benefits. On the collection side, the department is responsible for almost every tax a person or business in the UK pays.
Income Tax and National Insurance
Income tax is HMRC’s single largest revenue stream. For the 2026–2027 tax year, the personal allowance is £12,570, meaning you pay no income tax on the first £12,570 you earn.2GOV.UK. Income Tax Personal Allowance and the Basic Rate Limit Above that, earnings are taxed at 20% up to £37,700, at 40% from £37,701 to £125,140, and at 45% above £125,140. Those rates apply in England, Wales, and Northern Ireland; Scotland sets its own rates and bands.3GOV.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 pay 8% on earnings above £12,570 a year, and employers pay 15% on wages above a lower secondary threshold of £5,000.4GOV.UK. Rates and Thresholds for Employers 2025 to 2026
VAT, Customs, and Excise
Value Added Tax is the UK’s main consumption tax, charged at a standard rate of 20% on most goods and services. Most food and children’s clothing are zero-rated, and a reduced 5% rate applies to a narrower set of items such as domestic energy.5GOV.UK. VAT Rates Businesses above a turnover threshold must register, charge VAT on sales, and submit regular returns.
HMRC also collects customs duties on goods imported from outside the UK, and excise duties on specific products such as alcohol, tobacco, and fuel.6GOV.UK. Tax and Customs for Goods Sent From Abroad The department’s border role includes work to prevent smuggling of drugs, firearms, and other prohibited goods.7GOV.UK Publishing. New Customs Information
Corporation Tax and Stamp Duty
Companies operating in the UK pay corporation tax on their taxable profits. UK-resident companies owe it on worldwide profits; foreign companies with a UK branch pay only on profits earned through their UK activities.8GOV.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.9GOV.UK. Rates and Allowances for Corporation Tax
When you buy residential property in England or Northern Ireland above a certain price, HMRC collects Stamp Duty Land Tax. Scotland and Wales have their own property transaction taxes, administered separately.10GOV.UK. Stamp Duty Land Tax – Residential Property Rates
Benefits HMRC Administers
HMRC is not only a collector. The department manages Child Benefit, the regular payment made to anyone responsible for raising a child. You can claim, track payments, and update your details through HMRC’s online services or the HMRC app.11GOV.UK. Child Benefit – How It Works
Until recently HMRC also ran Working Tax Credit and Child Tax Credit. Those schemes ended on 5 April 2025 and have been replaced by Universal Credit, which the Department for Work and Pensions administers rather than HMRC.12GOV.UK. Tax Credits Ended on 5 April 2025 If you previously received tax credits, you can no longer make a new claim and should check your eligibility for Universal Credit instead.
How HMRC Was Created
HMRC came into existence in April 2005, when the government merged two older departments: the Inland Revenue, which handled direct taxes such as income tax and corporation tax, and Her Majesty’s Customs and Excise, which handled indirect taxes such as VAT along with border control and anti-smuggling work.13legislation.gov.uk. Commissioners for Revenue and Customs Act 2005 – Explanatory Notes The result was a single tax authority with oversight of virtually every form of taxation in the UK.
The department operates under the Commissioners for Revenue and Customs Act 2005, which sets out its legal powers and structure.14legislation.gov.uk. Commissioners for Revenue and Customs Act 2005 – Contents HMRC is classified as a non-ministerial department, which means it carries out its functions independently of direct ministerial control, though it remains accountable to the Chancellor of the Exchequer and to Parliament.
How You Interact With HMRC
Most employees never deal with HMRC directly for their main income. Tax is collected through Pay As You Earn (PAYE): your employer deducts income tax and National Insurance from each payslip before you receive your wages, using the tax code HMRC has issued for you.15GOV.UK. How You Pay Income Tax If your only income is a standard salary, PAYE usually handles everything.
If your tax affairs go beyond that, you likely need to file a Self Assessment tax 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 the following year, and online returns must be filed by 31 January after the tax year ends.16GOV.UK. Self Assessment Tax Returns – Deadlines Missing that date triggers an automatic £100 penalty even if you owe no tax.
Day-to-day contact with HMRC is largely online. Signing in through Government Gateway gives you a personal tax account covering your tax code, Self Assessment returns, and payment history, and 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 covers similar ground on a phone, including Child Benefit. For anything the online services cannot handle, GOV.UK lists specific phone numbers and postal addresses for each type of enquiry.