HMRC dangles £500M carrot for National Insurance system revamp

The UK government is inviting suppliers to bid to build a new national insurance system with a price tag of up to £500 million.

The tax collector, HM Revenue & Customs (HMRC), has issued a call to speak to suppliers about the procurement to continue to run and then update the National Insurance and PAYE System (NPS).

The “change” aspect of the new contract, which could last up to seven years, is to support “strategic milestones, key business events, and legislative or business-driven updates,” an official notice says.

The Preliminary market engagement notice states: “NPS currently operates on a legacy technology estate with limited modularity and scalability.

HMRC's future ambition is to transition towards a more agile, service-oriented architecture that supports strategic goals for Income Tax and National Insurance Contributions (NICs) administration, including increased real-time processing capability.” HMRC says the investment — the potential contract is earmarked at £500 million including tax — would lay the “groundwork for future innovation by ensuring HMRC has access to adaptable and resilient support services that can respond effectively to evolving policy, customer needs, and technology opportunities.” The department is set to hold a “supplier market engagement event” next month to provide an overview of the requirement, outline the anticipated procurement approach and timelines, and give suppliers an opportunity to ask clarification questions.

HMRC will publish the tender notice, inviting suppliers to bid for the contract, in September.

It expects to start in June of 2027.

In January last year, HMRC handed Accenture an additional £35.2 million without competition on a £70.4 million contract to run the NPS system, which is part of the UK's critical national infrastructure, collecting 40 percent of revenues into HM Treasury with nearly 40,000 users in HMRC and the Department for Work and Pensions.

The system was first introduced in 2009, when the tech services integrator provided application development and support services to the £10 billion Aspire contract, a tech deal which also included Capgemini, Fujitsu, and BT. ®