HMRC have become the first government department to agree to the delivery of cloud services over the public services network.
Taxpayer data currently stored in local offices will be moved to the online environment between now and next spring.
The Revenue has signed a contract with the Hampshire-based company Skyscape Cloud Services for centralised data storage in the G-cloud, the government’s online IT services catalogue.
The taxman says relocation to the cloud will be cheaper, saving £1m a year, and provide more secure and greener data storage.
It will also enable deployment of the government end-user device strategy, designed to increase the efficiency of the public sector and improve frontline services.
HMRC’s chief information officer, Phil Pavitt, said, "The Skyscape contract is a major step... in moving away from traditional ways of working with large service providers.
“And it's a great example of how we're exploring smarter, more innovative solutions that make life simpler for us and help us provide a better deal for [taxpayers],” he added.