HMRC says it will save £1m a year after signing a contract to move its data storage to the cloud.

The department signed a contract with Skyscape Cloud Services in a bid to secure cheaper, more secure and greener data storage.

HMRC is set to begin to move some of its data currently stored in local offices to the cloud between now and spring 2013.

The contract is the first deployment of G-Cloud services over the Public Service Network - a system set up to improve government communication links and cut costs.

Phil Pavitt, HMRC's chief information officer, said: 'This change will save over £1m a year in running costs and will increase reliability and security of HMRC's internal IT services.

'The Skyscape contract is a major step for HMRC 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 our customers.'

The contract was awarded via the UK Government G-Cloud framework, which enables the rapid sourcing and deployment of secure, low-cost utility services to the UK public sector. This is the first major service contract to be awarded via the G-Cloud by an organisation as large as HMRC.

HMRC said it will enable the department 'to move forward with its deployment of the Government End User Device Strategy, designed to increase the efficiency of the public sector and improve front-line services.'