HMRC is a vital component of the UK government's financial infrastructure, managing a significant range of responsibilities while raising funding for public services and government initiatives. As such, its activities and policies have a direct impact on the country's fiscal health and economic stability – but what exactly are these responsibilities and how did HMRC arise?


Origins of HMRC

His Majesty's Revenue and Customs refers to a UK governmental department covering a wide range of financial responsibilities and services. As a business owner or self-employed taxpayer, you most likely associate HMRC with taxation – but its history and responsibilities originate far beyond this field.

Although nowadays a household name, HMRC was formed only relatively recently – in 2005. However, HMRC's roots go back much farther. The modern organisation comprises a merger of the prior Inland Revenue and HM Customs and Excise:

Inland Revenue

The Inland Revenue hailed back to the Board of Taxes founded in 1665. It was established as part of national efforts to fund the Second Anglo-Dutch War (1665–1667). It soon became associated with the infamous window tax, with windows providing a proxy for individual wealth, and other forms of additional revenue for the British government.

Window tax (levied across England, Wales, and Scotland until 1851) was a type of property tax based on the number of windows on a building. As an alternative to directly calculated income tax (which remained highly controversial until relatively recent times), it was assumed that an individual’s wealth could be approximated according to the number of windows on their property.

As such, a tax was calculated according to the total number of windows. Unsurprisingly, this was often met with backlash. In fact, many historic buildings across Britain can be seen with clearly bricked-up windows – an iconic response to window tax! Window tax fell into the wider array of property taxes such as chimney tax which was also formed around the same time.

Eventually, in 1849, a wide range of taxes including Land Tax, Capital Gains Tax, Income Tax, and Corporation Tax (see our article Corporation Tax vs. VAT vs. Income Tax) were incorporated into the Inland Revenue – a direct predecessor of today’s HMRC.

HM Customs and Excise

During a similar timeframe, His or Her Majesty’s Customs and Excise – the other predecessor combined into HMRC – was taking shape. This institution began with separate HM Customs and HM Excise institutions, also with heritage dating back to the 1600s and beyond. Their jobs included the regulation of taxes pertaining to imported and exported goods, and duties relating to the manufacture of goods.

HMRC’s functions today

In 2005, HMRC was established in its modern form, combining the historic Inland Revenue and HM Customs and Excise organisations. As a result, its jurisdiction covers a wide array of governmental functions, responsibilities, and services. Alongside taxes (outlined below), HMRC controls National Insurance Contributions, the National Minimal Wage, and elements of state welfare.

Taxes administered and collected by HMRC include direct, indirect, and environmental taxes. Direct taxes relate to persons, companies, and property. Examples of direct taxes collected by HMRC include Corporation Tax and Income Tax (see our article on their differences here). Indirect taxes relate to transactions and manufacturing, including VAT (see our overview here) and Stamp Duty. Environmental taxes include taxation levied on energy and passenger aircraft.

Revenue collected by HMRC goes directly toward funding the UK’s public services, ultimately contributing to the quality of life enjoyed by UK citizens. HMRC provides a wealth of information (see here) relating to business and personal finance, helping you to stay on top of your monetary obligations. Furthermore, the Making Tax Digital initiative is bringing HMRC’s tax services into the modern world, allowing HMRC-recognised software providers such as AbraTax to help you streamline your finances.


In conclusion, it’s undeniable that HMRC plays a significant role in our lives today. From its 17th-century institutional origins to today’s high-tech systems, it’s clearly here to stay. With its diverse responsibilities, HMRC reaches beyond everyday taxes to include support surrounding social welfare, National Insurance, and environmental concerns. As such, HMRC holds a pivotal role in maintaining the UK’s financial health and quality of life.

Disclaimer: We aim to offer educational articles on our blog, focusing on tax-related topics. However, it's important to note that over time, the relevancy of this content might diminish, and we cannot guarantee accuracy. While these articles serve as a tool for enhancing tax knowledge, they are not a replacement for expert advice in accounting, taxation, or legal matters, given the unique nature of each individual's situation. Should you require personalized assistance, we encourage contacting HM Revenue and Customs (HMRC).