The tax gap estimate – the difference between what tax is
expected to be paid and actually paid – was 5.3% for the 2023 to
2024 tax year, figures published today (19 June 2025) show.
While £46.8 billion was unpaid in the 2023 to 2024 tax year, HM
Revenue and Customs (HMRC) collected £829.2 billion,
representing 94.7% of all tax due.
Every year, HMRC
estimates the tax gap using the most up to date information
available, though figures may be revised as more data becomes
available. In line with standard practice, previous years' tax
gap estimates have been amended as part of today's announcement,
including the tax gap for the 2022 to 2023 tax year, which has
been revised upwards from 4.8% (£39.8 billion) to 5.6% (£46.4
billion). This is due to improvements in data quality, the
availability of more up-to-date information and methodology
changes.
Some of the key findings from this year's calculations show:
- small businesses represent the largest proportion of the tax
gap (60%)
- Corporation Tax accounts for 40% of the total tax gap
- failure to take reasonable care (31%), error (15%) and
evasion (14%) are among the main behavioural reasons for the
overall tax gap
Exchequer Secretary to the Treasury, MP, has set out his three
priorities for HMRC:
closing the tax gap, improving customer services, and modernising
and reforming the tax and customs system.
Mr Murray said:
Every pound of tax uncollected puts a greater burden on honest
taxpayers and deprives our public services of vital funding.
In our first year in office, we have set out plans to raise an
extra £7.5 billion through the most ambitious ever package to
close the tax gap. We are determined to go further and faster to
make sure everyone pays their fair share, and help to deliver our
Government's Plan for Change.
HMRC's Making Tax
Digital (MTD) programme
is helping to reduce the element of the tax gap caused by error
and failure to take reasonable care. Up to the end of the 2029 to
2030 tax year, MTD for
VAT is predicted to deliver more than £4 billion in tax revenue
by reducing errors. MTD
for Income Tax will be introduced from April 2026 and is expected
to generate £1.95 billion in additional tax revenue by the end of
the 2029 to 2030 tax year.
As announced at Spending Review 2025, £1.7 billion will be
provided to HMRC over
four years to fund an additional 5,500 compliance and 2,400 debt
management staff – to ensure more of the tax due is paid, to fund
public services. Measures to close the tax gap announced by the
Chancellor at Autumn Budget 2024 and Spring Statement 2025 will
raise an extra £7.5 billion in revenue.
Further Information
The Measuring Tax Gaps
2025 report was published today, 19 June 2025.
HMRC's tax gap
estimates are official statistics produced in accordance with the
Code of Practice for Statistics, which assures objectivity and
integrity. Tax gap estimates are reviewed each year to reflect
updated data and methodologies.
