The UK tax gap – the difference between what UK tax is expected to be paid and what was actually paid – was 6.4% for the 2024/25 tax year.
According to HMRC latest report the largest share of the tax gap comes from the non-compliance of small businesses. They represent 62% of the gap! And, around half of the small business tax gap is for corporation tax.
Failure to take reasonable care (35%), due to carelessness or negligence, remains the largest behavioural risk to the tax gap, followed by error (16%) and evasion (12%),
HMRC collected £865.2 billion in 2024/25, amounting to 93.6% of all tax due. But that means an estimated £59.2 billion went unpaid in that tax year.
JP Marks, HMRC Chief Executive and First Permanent Secretary, said: “Today’s estimates reflect the changing world in which HMRC operates, where it is becoming more difficult to tackle non-compliance through traditional approaches alone. That is why our aim is a well-designed modern tax system that makes it easier to get things right first time and harder to get things wrong, and which allows us to respond effectively to non-compliance and tackle criminal activity.
“Measuring the tax gap helps us track long-term trends, which influence our policies and compliance strategy, allowing us to focus our efforts in the right places. In 2024-25, we collected and protected a record £48 billion in compliance yield. This is money that would have gone unpaid without our intervention.”
