Digital ID cards 'pave way for HMRC to make £600m tax grab'

Controversial Government plans to introduce digital ID cards could pave the way for a £600m 'tax grab' by the Treasury, reports say. HM Revenue & Customs (HMRC) is reportedly seeking to use the digital identification to secure unpaid revenue and prevent "errors" by the public.

Labour hopes to roll out the new ID system in 2029, which has been met with strong opposition.Sir Keir Starmer announced the plans at the end of September, with polling showing public support for the scheme had collapsed. Labour hopes to use the verification as part of efforts to tackle illegal migration, while also making it easier to access Government services.

A document published by HMRC in July stated that it was keen to explore how digital ID cards could enhance the tax system, noting that this could include "pre-population of tax returns" with details already held by the tax authority and linked to a taxpayer's digital ID.

According to The Telegraph, it suggested this would help collect tax currently going unpaid by "making it easier for customers to comply with their obligations and reducing the opportunity for error".

Former Labour leader Sir Tony Blair's think tank has suggested the digital ID scheme could be used to "better target tax-compliance activity" and estimates this would raise an additional £600 million per year.

The Tony Blair Institute for Global Change (TBI) has pushed for the introduction of the online identification scheme.

The Conservatives, Reform UK and Liberal Democrats have all opposed the plans, while a petition against the ID scheme has more than 2.8 million signatures.

The petition says it believes the proposals would be "a step towards mass surveillance and digital control".

The IDs would be stored on smartphones in a similar way to digital bank cards and would contain information on the holder's name, residency status, date of birth and nationality.

Ministers have stated that the ID will only be required as proof of the right to work, but there is scope for its use to be expanded in the future to access public services.

It is expected to be subject to consultation and may require legislation.