Fortieth Report
of Session
2024-25
HM Revenue and
Customs
Collecting the
right tax from
wealthy individuals
Introduction from
the Committee
HMRC defines wealthy individuals as those earning more than
£200,000 a year, or with assets over £2 million, in any of the
last three years. In 2023–24, HMRC identified
approximately 850,000 wealthy individuals, up from 700,000 in
2019–20. In that year, wealthy individuals paid a total of £119
billion in personal taxes (25% of personal tax receipts).
Wealthy individuals often have complicated tax affairs covering
multiple taxes. They often have a wide spread of tax liabilities
on both their income (in the form of Income Tax and National
Insurance) and assets (in the form of Capital Gains Tax,
Inheritance Tax and stamp duties). They may adopt complex and
sophisticated tax planning to reduce their liabilities. The
complexity of their tax affairs may increase the potential for
non-compliant behaviour, either deliberately in the form of tax
avoidance or evasion, or mistakenly, by applying tax rules
incorrectly. HMRC therefore treats wealthy individuals separately
from other taxpayers.
HMRC's work to engage with wealthy individuals to ensure they
comply with the tax rules, and then to follow up and investigate
risks, is led by the ‘wealthy team' within HMRC's Customer
Compliance Group, consisting of around 1,000 staff.3 The wealthy
team examines most personal taxes paid by wealthy individuals. A
separate assets team examines what taxpayers pay in Inheritance
Tax. Other teams within HMRC are involved in analysing data on
wealthy individuals and undertake compliance activity on key
issues such as offshore tax compliance. HMRC estimates its
compliance activities with wealthy individuals cost £350 million
in 2023–
24. The government has highlighted tackling tax avoidance and
evasion and increasing tax revenues by improving compliance,
particularly from wealth held offshore, as priorities for action.
In the Autumn 2024 Budget the government confirmed its ambition
to close the tax gap (the amount of lost tax revenue), and the
scaling up of compliance activity to tackle serious offshore
noncompliance, including fraud by wealthy customers and
intermediaries. In the Spring 2025 Statement the government
committed further funding and new measures to tackle serious
non-compliance, particularly wealthy offshore noncompliance.
Based on a report by the National Audit Office, the Committee
took evidence on 12 June 2025 from HMRC. The Committee published
its report on 16 July 2025. This is the Government's response to
the Committee's report.
Relevant reports
Government response
to the
Committee
1.ThegovernmentagreeswiththeCommittee'srecommendation.
Target implementation
date: Spring
2026
-
HMRC's Transformation
Roadmap was published in July 2025. This includes HMRC's
plans to close the tax gap. HMRC will publish its plan in
spring 2026 on how it will improve compliance by the wealthy
population and set out timelines and outcomes for each
objective.
- The government agrees with the Committee's recommendation.
Target Implementation
date: Autumn
2026
- The government notes the Committee's conclusion. HMRC
currently segments the
wealthy population using a range of risk factors including
estimated wealth and complexity.
- HMRC will undertake further analysis to enhance its
understanding of how different levels of wealth and complexity
impact risk in this population and so improve its
identification and targeting of risk.
- The government agrees with the Committee's recommendation.
Target Implementation
date: Autumn
2026
- HMRC will continue to refine and develop its estimates of
the value of tax at risk and set out the progress made in its
response. This response is closely linked to the response at
recommendation 6b.
- The government agrees with the Committee's
recommendation. Recommendation implemented
2.TheFirstPermanentSecretaryofHMRChaswrittentotheCommitteesettingout
the
department's plans alongside this Treasury Minute response.
- HMRC will continue to enhance its understanding of
billionaires with a UK tax footprint. HMRC will provide the
Committee with assurance that all billionaires with a UK tax
footprint that are identified as part of the department's
annual refresh of the wealthy population have an allocated
Customer Compliance Manager (CCM). CCMs are senior tax
professionals who provide extra scrutiny of individuals who
have complex tax affairs and support customers to get their tax
right first time. This refresh takes place annually and
customers who are newly allocated a CCM in the next update will
be informed by summer 2026. HMRC will provide assurance to the
Committee that this has been completed by autumn 2026.
- It is not a requirement in UK law for individuals to
routinely report on their total level of wealth or assets held.
Whilst there are data limitations, HMRC is able to estimate the
wealth of individuals and understand who the wealthiest
individuals are for UK tax purposes. To do this HMRC uses a
range of data sources, including but not limited to
self-assessment returns, data received from overseas tax
jurisdictions under automatic exchange of information, third
party data and open-source data, including the Sunday Times
Rich List.
- The government agrees with the Committee's
recommendation. Recommendation implemented
- The First Permanent Secretary of HMRC has written to the
Committee alongside this Treasury Minute response setting out
the steps the department will take to request more data. HMRC
will provide a further update in Autumn 2026 on any progress
made on acquiring additional data sets.
- HMRC regularly explores where additional data could assist
closure of the tax gap. This has led to additional reporting
and receipt of data. For example, HMRC has recently implemented
new regulations, such as the Crypto-Asset Reporting Framework.
Informed by operational work and insight gained from external
recruits alongside work with international partners, HMRC will
set out its progress on this to the Committee in Autumn 2026.
It is a matter of policy and subject to ministerial decision
whether additional information is requested directly from
wealthy individuals.
- The government agrees with the Committee's
recommendation. Recommendation implemented
- The First Permanent Secretary of HMRC has written to the
Committee alongside this Treasury Minute response setting out
the steps HMRC will take to better understand the links between
personal wealth and connected entities, including complex
trusts and structures At Spring Statement 2025 the government
announced plans to enhance HMRC's approach to
offshore tax non-compliance by the wealthy. HMRC will set out
these plans as part of its response to recommendation 1.
- The government agrees with the Committee's recommendation
Target implementation
date: Autumn
2026
- At Spring Statement 2025, the government announced plans to
tackle offshore tax non‑compliance by the wealthy. The
government published its Transformation
Roadmap in Summer 2025 which sets out how HMRC will use
investment to improve performance. The First Permanent
Secretary of HMRC has written to the Committee setting out
how HMRC's investment plans are intended to improve
compliance outcomes overall.
- HMRC is currently designing how the investment it has
received through the Spending Review will be deployed.
Following further design work, HMRC will set out what
investments will help improve a range of compliance outcomes
for the wealthy customer population. The department will set
this out in more detail to the Committee by Autumn 2026.
- The government agrees with the Committee's recommendation
Target implementation
date: Autumn
2026
- HMRC will report back on this recommendation once its
assessment of its application of powers and sanctions has been
completed.
- The government agrees with the Committee's recommendation.
Target implementation
date: Autumn
2026
4.HMRC uses a range of civil and criminal powers to tackle
offshore non-compliance. These are deployed according to the
facts of each case and enable the department to take necessary,
andproportionate,stepstorecovermoneythat
isowed.Theserangefrominviting customers to provide disclosures,
through to criminal investigation, the charging of significant
penalties, and seizure of assets. HMRC use these powers singly
and, where appropriate, in combination to achieve the maximum
effect.
- Some powers are used more regularly to correct inaccuracies
and, where appropriate, penalise past behaviours. Others are used
more sparingly but remain vital in terms of their deterrent
effect. As a result, the impact of each power or penalty cannot
be measured in isolation or assessed solely in terms of how many
times they have been used.
- HMRC is already reviewing instances where it may be
appropriate to issue penalties to enablers of tax evasion or
non-compliance under schedule 20 Finance Act 2016 but is not
minded to set an annual target for this penalty nor the use of
any other enablers sanctions. This is because the issuing of
these penalties is dependent on the behaviours shown by taxpayers
and enablers in each specific case. In addition, HMRC may decide
to use other penalties, powers or sanctions (or a combination of
these) to address the risks posed.
- The government agrees with the Committee's recommendation
Recommendation implemented
- At Spring Statement 2025, the government announced its
ambition to increase the number of positive charging decisions
(PCDs) for the most harmful fraud by 20%, from 500 to 600 per
year by 2029-30. HMRC has not set specific targets for PCDs in
different customer groups, but as part of these plans it is
expected that the number of wealthy individuals under criminal
investigation will increase, with a corresponding increase in
PCDs. Investigation activity will also include fraud
facilitated by those in large corporations, and by individuals
and companies who make it possible for others to hide money
offshore, in addition to tackling other key threats. The
reference in the Committee's report to increasing the number of
individuals charged each year by five was based on previous
prosecution volumes rather than positive charging decision
figures.
- HMRC has already significantly increased the number of
wealthy individuals under criminal investigation from around 50
in 2016-17, to 275 at the end of 2024-25. Due to the length of
time it takes for criminal investigations to reach trial, an
increase in PCDs during this spending review period will likely
lead to an increase in prosecutions in later years. HMRC is not
a prosecuting authority; decisions about prosecutions sit with
the independent prosecuting authorities.
- The government agrees with the Committee's recommendation.
Target implementation
date: Autumn
2026
- HMRC will review its data and modelling on income, gains
and the value of assets owned by individuals. HMRC is committed
to continually reviewing the range of statistics it publishes
and improving transparency and will explore options for
extending the range of data it publishes in this area.
- The government agrees with the Committee's recommendation.
Target implementation
date: Autumn
2026
- HMRC recognises the importance of understanding the
contribution of the wealthiest individuals to the overall tax
gap and is committed to improving its tax gap estimates.
Understanding the tax risks linked with wealthy individuals
presents challenges, given the complexity of their tax affairs,
which may present additional opportunities for non-compliance.
- As part of its ongoing analytical work, HMRC is scoping
work to better understand the contribution of wealthy
individuals and the entities they control to the overall tax
gap. This will involve reviewing the scope of current estimates
to determine whether and how the contribution of wealthy
individuals and their controlled entities can be more
accurately captured.
- HMRC will write to the Committee in Autumn 2026 updating on
its progress in improving the estimate of the wealthy tax gap.
