AWS: US$629m to Shift HMRC From Legacy Data Centres to Cloud

HMRC, the UK’s primary tax authority, has awarded a £473m ($629m) contract to Amazon Web Services (AWS) to support a move away from traditional data centres towards cloud-based infrastructure.

The agreement will run for an initial 10 years, and forms a core part of HMRC’s data centre exit programme. It sets a clear timeline for closing physical sites and replacing them with hyperscale cloud capacity.

HMRC is required to vacate three legacy data centres managed by Fujitsu and fully decommission remaining infrastructure by June 2028.

Data centre exit strategy accelerates

The programme involves the migration of complex digital operations into AWS-hosted environments. Hyperscaler services will replace traditional data centres in the form of large-scale cloud platforms, where organisations own and operate physical servers on-site.

AWS will deliver resilient infrastructure that supports the full scope of HMRC’s systems. This extends beyond basic hosting into broader transformation work. The contract includes migrating services outside Fujitsu-managed estates, modernising applications and enabling future technology adoption.

The technical challenge lies in the legacy estate. HMRC relies on a mix of nearly a dozen ageing operating systems, including proprietary platforms such as HP’s Unix, IBM’s AIX and Sun’s Solaris. These systems are often deeply embedded in business processes, making migration complex and resource-intensive.

The procurement, officially titled “Procurement for the provision of Hyperscaler Services to enable Data Centre Exit,” was designed to attract only the largest cloud providers. HMRC signalled early on that it expected to select a single hyperscaler to handle the full migration.

Hyperscaler competition narrows

While the contract attracted interest from major providers, the competitive field has narrowed as technical requirements became clearer. Reporting from The Register indicated that HMRC shortlisted AWS, Google and IBM during the bidding phase.

An insider comment, from an individual familiar with the procurement, told The Register: "[It was all about] ability to execute, a proven history of working with departments like this – seven-year track record of hosting massive hyperscaler-type services. It could only be AWS or Microsoft.”

AWS ultimately secured the contract, aligning with its position in the data centre sector. The company ranks first in Data Centre Magazine's Top 100 Data Centre Companies list 2025, reflecting its global infrastructure footprint, focus on AI workloads and investment in energy-efficient operations.

In the UK, AWS operates a cloud region in Bristol and continues to expand its physical presence. Plans for a new London data centre, submitted to Buckinghamshire Council, show there is an ongoing investment in local capacity. 

Pricing scrutiny shapes cloud adoption

Despite growing reliance on hyperscalers, the market faces scrutiny from regulators concerned about pricing and competition. Minister Kanishka Narayan addressed these concerns in a written response, referencing findings from the Competition and Markets Authority (CMA).

Kanishka said the investigation has “identified a number of potential competition concerns with clear negative impacts for UK businesses, consumers and the public sector".

Although no updated cost estimate was provided, earlier CMA analysis suggests that organisations could overpay for cloud services by around £500m (US$664m) each year. This raises questions about long-term value as government departments migrate away from owned data centres.

Kanishka also noted that the CMA recommends prioritising a deeper investigation into cloud market dynamics. However, the decision rests with the independent authority, leaving uncertainty over how regulation may evolve alongside continued hyperscale adoption.

The immediate focus remains on execution for HMRC. Migration of legacy systems and closure of physical sites define one of the UK public sector’s largest data centre exit programmes.