The taxman has placed cutting property budgets and reliance on online filing at the centre of its programme to slash department costs by £674m by 2011.

HM Revenue & Customs set the cost-cutting target in its value for money delivery agreement, which was made public last week.

HMRC hopes to save £220m by slimming down its properties and moving offices out of London and the South East. ‘Savings will be made by reducing the size of HMRC’s estate… and disposal or sub-letting of buildings,’ HMRC said in a briefing note.

E-filing is set to be the other major contributor to cost cuts, with £85m expected to be saved by 2011 through promoting online filing. The use of IT is expected to reduce headcount by 3,000 full-time posts by 2013/2014.