Tax gap uk ICAEW’s Tax Faculty analyses the key data. This figure has been Tax avoidance is the exploitation of legal loopholes to avoid tax. Este é o segundo relatório do Projeto Tax Gap e Matriz de Insumo Produto com Enfoque Tributário, realizado pelo grupo de trabalho constituído pela Portaria RFB nº 283, de 7 de fevereiro de 2020. The Chancellor announced a £1. Following HM estimates where this is feasible. The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. While the gap has fallen over recent years, it warns that the recession triggered by the COVID-19 crisis is expected to have a “dire impact” with contraction in European economies liable to see an increase in the • VAT gap preliminary estimate at the Autumn Statement; • VAT gap second estimate at Budget; and • VAT gap final estimates as part of the Measuring Tax Gaps publication respectively The VAT gap estimate for the preliminary and second estimate as well as a forecast for future years is published as a part of the Office Our next article looks at changes announced by James Murray, the Exchequer Secretary to the Treasury, on 11 March 2025 aimed at simplifying the tax system and easing the compliance burden for taxpayers (largely for those with ‘side hustles’), closing the tax gap and modernising the system through digitisation. 3% in 2005/6 to 14. However, a one-off wealth tax is a very different proposition. It also shows the size of each tax gap as a percentage of the total amount of tax owed. ” Gareth Davies, the head of the NAO Downloads. The UK government has been collecting data on the Tax Gap since 2005 and was forced to publish it after a long freedom of information battle with Private Eye magazine. 4 This Applying the 19% tax charge to profits reported at Google UK Ltd (by far the largest of the UK subsidiaries), along with all other identified UK Google companies, produces a tax charge of around £146m, i. Among the reasons that analysis of the overall direct tax gap is problematic are: • there is no straightforward way of arriving at a top-down estimate of the theoretical The minister’s statement includes a reference to the government’s plans to tackle the tax gap. 8 billion, or 4. 1% of all tax liabilities, the same proportion Corrigendum: In the Introduction page 4, the sentence beginning “It estimated the tax gap” should instead read “It estimated the tax gap (the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid) to be £35. 8 billion in 2016/17, increasing from £0. Since The tax gap for 2011-12 is estimated at £35 billion a year – this is the difference between the amount of tax that should in theory be collected, against what is actually collected. In the UK case of Cheney v. 3% between 2005 to 2006 and 2011 to 2012. • The reasons that a top down approach to the entire direct tax gap is The bottom-up approach builds a total tax gap from estimates of components of the tax gap. 1 billion in absolute The amount of tax lost in the 2021-22 financial year was 4. In the US, under-reporting alone ĥ Tax gap: After falling by around a third between 2005/06 and 2016/17, there has been very little reduction in the level of the tax gap. 22 billion) fiscal year 2022-23, marking a steady increase over the last two years. The latest estimate, for 2014-15, shows an overall downward trend as the percentage tax gap reduced from 8. Our past work has highlighted the inherent uncertainty in the calculation and acknowledges that other commentators have published estimates of the UK tax gap using different data, methodologies and broader definitions than HMRC. 8bn. In percentage terms, it has fallen and methodological differences, of those published, the UK’s tax gap is one of the lowest in the world and the only one covering direct and indirect taxes that is measured and published every year. Hier sollte eine Beschreibung angezeigt werden, diese Seite lässt dies jedoch nicht zu. The report by Tax Research UK estimated the tax gap at £120 billion. HMRC is funded to stop the tax gap from growing. 8bn in 2022-23 In September 2021 HMRC published revised estimates, which put the tax gap at £35 billion for 2019/20, representing 5. In half of all EU member states have tax gaps that might exceed their healthcare spending, and often by considerable amounts. Compared to the other taxes, the tax gaps for income tax, national insurance contributions and capital gains, decreased from 4. The difference between the tax gap and the HMRC now says offshore tax gap data will be published in June 2024, two years after the government announced it and a year after the information was due. However, a deeper dive into the statistics shows increasing levels of tax evasion and careless This report investigates the scale of the UK tax gap, and tax evasion in particular, in the UK and what can be done about it. 5 billion per year by 2029/30. The recent spending review highlighted the extent to which our public Simply sign up to the UK tax myFT Digest -- delivered directly to your inbox. 4% in 2022 to 2023. 8bn in the previous year. In 2023 and 2024, the Government announced additional The only significant comment on tax during the Spring Statement speech itself was when the Chancellor announced plans to further close the tax gap and raise over £1 billion in Small businesses are responsible for the largest proportion of the overall tax gap – now 60% compared to other categories of taxpayer (HMRC use the quaint term ‘customer segments’). Unlock this content. 3 Subsequent debates on the tax gap (since 2015) 28 “The tax gap has shifted by £3bn over 18 years. HC 372 SESSION 2019–2021 22 JULY 2020. This figure has been revised down to 4. Report - Tackling the tax gap (. 5 billion ($10. For UK residents, the first thing you will need to do is to contact DWP. In the last financial year, 2018-19, it collected 90% of the tax owed through this “voluntary compliance” The UK has a relatively low tax gap compared to other countries such as the US, Australia and Italy, and it becomes harder to raise revenue after the low-hanging fruit has been picked off. As a result, it is difficult to compare Notes for Figure 2. 8% of total theoretical liabilities (£739. 8%, or £35. Data was published for the 2022-23 tax year only last month and it shows a tax gap of £39. Whilst the UK is to be applauded for undertaking this exercise, which is in itself rare internationally, the approach HM Revenue & Customs The tax gap is the difference between taxes collected by HMRC and the theoretical amount that should have been collected. Their share has been consistently The tax gap provides HMRC with a useful tool for understanding the relative size and nature of tax non-compliance. The UK tax gap is defined as the difference between the amount of tax that should be collected by HM Revenue and Customs (HMRC) and what is actually collected. The so-called “offshore tax gap” constitutes evasion (the deliberate underpayment of tax), failed tax avoidance by HM Revenue and Customs (HMRC) produces estimates of the tax gap—the tax revenue HMRC should receive but does not. In light of these imminent new measures and, for the first time, with a government minister as Chair of HMRC’s Board, it is clear that taxpayers (and, indeed, HMRC themselves) can expect increased HM Revenue and Customs (HMRC) announces a rise in the "tax gap" - the difference between the amount of tax it should collect theoretically, and the actual total. This week’s Big Question asks readers: should the UK government raise personal taxes to plug a gap in the public finances? The UK tax authority increased its scrutiny of value added tax avoidance in 2022-23, opening 23 per cent more cases than the previous year, new data has shown. 8 per cent of tax liabilities. The party says giving more money to tax officials would help to raise £5bn a year. Originally taxpayers had until 31 July 2023 to correct care”) is the largest single element of the tax gap. 4%. The Supreme Court has adopted a narrow interpretation of provisions of the UK/Canada Double Tax Treaty in relation to payments related to an oil field. HMRC relies heavily on taxpayers - individuals and organisations - reporting their finances and paying their taxes in line with the rules. As a percentage of total taxes, the gap has been declining in recent years. “HMRC should consider applying the lessons it has learned in tackling tax avoidance to challenge other types of non-compliant behaviour and support taxpayers to pay the right tax. 8 billion The government has announced what it calls the most ambitious ever package to close the tax gap - the gap between tax owed and tax paid. Labour's plans for closing the tax gap will have implications for the UK tax disputes and taxpayers may face an increasingly aggressive HMRC. 3% in 2005-06 to 6. Shadow chancellor Rachel Reeves has said Labour's plans to tackle tax dodgers are "not rocket science". Read more Tax gap as a percentage of theoretical tax The “tax gap” is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. 5% in 2005/06, to 4. 3% in 2005 to 2006 to 4. Income tax and national insurance now lead the tax gap, with corporation tax also a significant contributor, partly due to Rishi Sunak raising the headline rate from 19% to 25% in March 2021. 2% of all tax due. This was still less than the 55% average amongst higher-tax European This graph shows the tax gap and percentage of liabilities: tax year 2005 to 2006, to tax year 2016 to 2017. At £50,000, the tax gap for The UK’s so-called tax gap in the 2022 to 2023 tax year is estimated to stand at £39. Over recent years there has been growing interest in measuring and analysing the stark racial wealth gap which exists across many nations. What could this mean for UK The economy moves from having a small negative output gap in 2024 to a positive output gap, which peaks at just under ½ a per cent in 2026. The UK Tax Gap Mi k Th kMick Thackray Deputy Director Knowledge Analysis & Intelligence Enforcement & ComplianceKnowledge, Analysis & Intelligence, Enforcement & Compliance HM Revenue & Customs January 2012January 2012. Measuring tax gaps. This may be because the European Commission does itself consider this issue and publishes an annual report on the VAT gap, analysed by country for each EU member state (TAXUD 2018). This research covers what is assumed to be non-taxable, as well as taxable activity. Therefore, on the face of it, the estimated reduction in the VAT gap suggests that avoidance, evasion, and errors are reducing in UK VAT. 5% in the 2005 to 2006 tax year to 5. Home; UK Budget; Updates. His Majesty’s Revenue and Customs also estimated its percentage of unclaimed theoretical VAT liability grew to 5. 2 billion of the UK tax gap in 2016-17. These new figures show the tobacco smuggling tax gap - the amount of estimated duty lost every year to tobacco fraud - has now reduced from 16. Some studies put it at R200-billion or more, which is 10% of The overall tax gap in the UK — the estimated difference between tax owed and tax paid — was around £32bn in 2020-21, the latest year for which data is available. 9%. This chapter does, in light of A report published today shows HM Revenue and Customs (HMRC) has slashed the tax gap on illicit cigarettes and tobacco by over half since 2005. Yesterday's HMRC report 1 looks at the estimated tax gap in 2022-23, but also revises some figures for earlier years. ATI Events. [71] It can be broken down by tax type Tax Amount Income Tax, National Insurance and Capital Gains Tax: £14. The report puts the tax gap at an estimated £39. It was estimated at that time, that the loss The government’s pledge to invest £300 million in HMRC over the next five years to close the UK’s tax gap has been branded “wholly insufficient” by a leading tax expert, who warned that without a long-term strategy and systemic reform, the country’s complex tax system will continue to hinder progress. It was estimated at that time, that the loss each year was £95 billion with £25 billion of In addi tion, the estimates of tax avoidance and evasion within personal income tax, national insurance contributions and capital gains tax are all described by HMRC in 2017 as being based on ‘developing methodologies’ whilst the estimates for the tax gaps for sta mp duty reserve tax, inheritance tax, petroleum revenue tax, environmental taxes and insurance premium tax are 2 The tax gap 12 2. 1 billion) in the 2022-2023 financial year, according to a report published by the office the UK tax gap in 2019 to 2020 is estimated to be 5. They think it would work and could raise one-quarter of a trillion pounds over five years. 9% in 2005 to 2006 HMRC recently published the latest tax gap figures which shows the difference between the amount of tax collected and the amount that theoretically should have been collected. The regime has been designed to reduce the £5. 0% in 2021-22, whereas the corporation tax gap increased from 11. In financial year ending (FYE) 2023, which is April 2022 to March 2023, median equivalised household income in the UK before taxes and benefits was £37,300, increasing to £39,700 after taxes and benefits. 9 billion in 2014/15. 5 The “tax gap” is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. To unlock this content: Take a Free The chancellor of the exchequer, Rachel Reeves, delivered the first budget of the new government on 30 October 2024. 8% of tax owed, this gap is the difference between what HMRC should and in reality, does collect. Not everyone agrees with HMRC’s estimate of the tax gap. Alexander Chislett (UK), Mr. Stability. A ‘tax gap’ will always exist, because it is impossible to collect every penny theoretically owed in tax. The government’s pledge to invest £300 million in HMRC over the next five years to close the UK’s tax gap has been branded “wholly insufficient” by a leading tax expert, who With the total tax liability of the UK estimated to be £739bn, this translates to a larger real tax gap of £35. 8%, or £36bn for 2021/22; HMRC neither resourced nor tasked to reduce the Tax Gap below its current level; £1 invested in tax compliance produces on average £14 additional tax revenue; (PAC) paints a concerning picture of tax evasion in the UK retail sector. This was made up of £70 billion in evaded tax, £25 billion in avoided tax and £25 billion in tax paid late. Its most recent estimate for 2019/20 is £35 billion, or approximately 5% of total tax liabilities. The estimate – now published annually by HMRC – has been The tax gap for 2022/23 is estimated to be £39. In 2023/24, UK government raised around £1,099 billion (£1. 7bn) and VAT contributing 20% (or £8. 8 billion, which is 4. This adds another layer of uncertainty about tax gap figures for the most recent years. Resourcing HMRC’s compliance work to maintain rather than reduce the tax gap means the government is missing out on billions in lost revenue. The last are here. because it was based on “among other things, a significant overestimate of the UK’s VAT gap”. In absolute amounts the biggest tax gaps are in Italy, France and Germany. Since 2005, the size of the The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. ; Main findings Overview. News Strengthening domestic revenue: lessons from Liberia. The tax gap – the difference between what is owed and what is collected – HMRC has also noted that the tax gap for 2020/21 will be revised in the summer of 2023 when ‘Measuring Tax Gaps 2023’ is published. To improve the horizontal equity of taxation by ensuring that all taxes that should be in use to In our latest report, the UK tax gap in 2021 to 2022 is estimated to be 4. HMRC now issues nudge letters on a wide range of issues, including let properties, P11D discrepancies, deemed domicile status, tax residency, transfer pricing and undeclared I gather HMRC will be publishing their latest tax gap figures this week. 3. Between 2005 to 2006 and 2011 to 2012 the excise duties gap followed a downward trend There has been a long-term reduction in the Income Tax, National Insurance contributions and Capital Gains Tax gap from 4. From the median full-time income just below £29,000, Scots are paying more in income tax than people on the same earnings are having to pay in the rest of the UK. 8bn of tax avoidance and the £11. 8% of the total theoretical tax liabilities of £823. Labour’s plans for improving tax compliance are set out in a 15 page paper: ‘Labour’s Plan to close the Tax Gap’. publication. This is an increase from 2010 when PCS last commissioned Richard Murphy to estimate the tax gap. 5bn likely to have been lost On 20 June 2024 HMRC published details of the UK’s tax gap for 2022/23. 9% of theoretical VAT liability, or £8. ĥ Compliance yield: HMRC’s yield from compliance activity has fallen this estimates for the tax gaps in the four nations of the UK, particularly since the devolution of Income Tax powers to Scotland from 2016–17, and Wales from 2019– 20. The Corporation Tax gap declined from 11. the “tax gap”. in any given year. Since the publication date of the ‘Measuring tax gaps 2024 edition’ is during an election period, in The Measuring Tax Gaps 2022 report was published on 23 June 2022 and estimated the tax gap for the 2020 to 2021 tax year at 5. 8bn, representing 4. In the UK, the Runnymede Trust’s 2020 The Colour of Money report pointed to A 'legal interpretation tax gap' arises where a tax authority (in the UK, Her Majesty's Revenue and Customs (HMRC)) and a taxpayer take a different view of the meaning of the tax law as it applies The Landfill Tax gap is 14. The full data series can be seen in the online tables. 3 billion) in 2021-22, the latest year available. which includes the final estimate for the 2021/22 VAT gap. (that is removing the current incentives for EV take up) Tax evasion, which is illegal, accounted for approximately 13% of the tax gap in 2021/22 (around £4. Paying a fair share of tax. The report suggests that the UK‟s tax gap may now be £122 billion a year. 9% for large companies. 7% in 2022 to 2023. 8% of theoretical liabilities. J16. 17 February 2025 Publication . The figure will be around £33 billion, simply because ever since this data was first published in 2010 the tax gap has never been below £27 billion and has never gone above £35 billion. ĥ Compliance yield: HMRC’s yield from compliance activity has fallen this Gender wealth gap soars to 42% by age 64 with staggering 177% disparity in shares and severe long-term economic impact on women, warns Women’s Budget Group Together with Tax Justice UK and Patriotic Millionaires UK we are calling on the Government and opposition parties to adopt wealth taxes. The report puts the tax gap at an estimated £35. In the last financial year, 2018-19, it collected 90% of the tax owed through this “voluntary compliance” HMRC’s estimates that the tax gap — the difference between what it expected to collect in tax and what is paid — was £39. 8 billion or 4. The UK’s so-called tax gap in the 2022 to 2023 tax year is estimated to stand at £39. The cigarette tax gap rose to an estimated £1. 4 . 7% for mid-sized firms and 2. What is the tax gap? The tax gap is the difference between the amount of tax due to the Exchequer and the amount actually collected . 8bn, with small businesses shown as the largest component of the tax gap by customer group, contributing a 60% share. 0%. This figure is up in In 2022/23, the value of the tax gap in the United Kingdom was estimated to be around 39. The tax gap is an important measure of how much revenue may be missed—due to evasion, avoidance or non-payment—that could otherwise fund vital public services. 1. 5 billion in additional tax revenue per year by 2029-30 Tackling the tax gap. They use this understanding to address the causes of non HMRC publishes figure each year about the UK's 'tax gap', but what is it? ICAEW experts describe what this shortfall is, what causes it and whether it is getting bigger. The tax gap attributed to small businesses continues to rise, and now stands at £24. 6mn). The VAT gap is estimated to be 4. 3 billion) during the 2023-2024 financial year, according to preliminary projections. To think that you can reduce it by £5bn or £6bn per annum over the next five years, I think would be quite a tall order,” said Steven Pinhey the UK direct tax gap. The tax gap is estimated to be 4. 2 HMRC’s approach in assessing the tax gap (up to 2015) 17 HMRC’s development of an annual tax gap report (2008-11) 17 Initial controversy over HMRC’s estimates (2010-13) 20 The tax gap and ‘tax dodging’ (2013-15) 26 2. What is the Tax Gap? The Tax Gap (which applies to Inheritance Tax as well as other taxes) measures the difference between the amount of tax the Treasury think it should be getting and what it has actually received. Given much of the estimated tax gap is in relation to taxes that are self-assessed by UK businesses, this is likely to be an area for the UK government to target. We use some essential cookies to make this website work. This report provides an estimate of the tax gap across all taxes and duties administered by HMRC. For 2020-21, 71% of the tax gap estimate attained a During this provided time period, the tax gap in the UK was highest in 2005/06, when it was 7. 51% in Romania. The tax that should be collected is the total tax revenue due if all taxpayers comply with the tax law and follow HMRC’s interpretation of the intention of 8 HMRC sets out the uncertainties in its tax gap calculation in its annual . This The Stamp Duty Land Tax gap has reduced from 3. For Tax gaps are the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. 1 But there is a minority who try to break the rules, and others who enter into avoidance schemes or aggressive tax planning arrangements which clearly go beyond what Parliament intended. ,Tax evasion and tax avoidance leading to the emergence and expansion of the TG erode the business ethics and distort the rules of fair competition, thus undermining the social trust and moral infrastructure of business transactions. It estimates 45% of this was due to error or carelessness. This lowers GDP growth to around 1½ per cent in the final three years of Hier sollte eine Beschreibung angezeigt werden, diese Seite lässt dies jedoch nicht zu. This figure is up from But what is the tax gap? The ‘tax gap’ is the difference between the amount of tax that is owed to HMRC, and the amount that is collected from taxpayers. 8bn “legal interpretation” tax gap by helping HMRC to identify more legal interpretation For example, you have until 5 April 2030 to make up for gaps for the tax year 2023 to 2024. High income Individuals within the Hidden Economy that generated a total For example, the US lost $450 billion worth of tax revenue in 2006 (Gemmell & Hasseldine 2012:4); the UK, £34 billion ($41. The richest fifth had a mean equivalised Taking BEPS into account, and assuming that a proportion of tax losses to Non-Payment and Legal Interpretation result from fraudulent tax behaviour, it would not be unreasonable to assume that Tax Fraud Gap is at least £20bn in the UK. The National Audit Office HMRC estimates that 4. Key facts. com, 2014). , the amount of revenue that a country can afford to collect, given its inherent economic strength, not based on what the parliament has mandated. The vast majority of businesses want to get their tax Tax avoidance deprives the UK of the money it needs to fund public services and undermines public confidence in the fairness of the tax system. Read more on a top earner in 2016–17 was 51%. The tax gap is the difference between the amount of tax theoretically owed and the amount collected. The UK has a relatively low tax gap compared to other countries such as the US, Australia and Italy, and it becomes harder to raise revenue after the low-hanging fruit has been picked off. 8bn, with corporation tax contributing 34% (or £13. 98% in Luxembourg to 29. However, it’s not all good news Tax gap by customer group . Tackling tax avoidance. 8% of the total theoretical tax liabilities. 4 billion ($4. The difference between the net and Hier sollte eine Beschreibung angezeigt werden, diese Seite lässt dies jedoch nicht zu. Per the IRS report, the tax gap has risen since the last IRS study for the 2014 to 2019 taxable years. HMRC estimates that the tax gap—the difference between the amount of tax that should, in theory be paid to HMRC, and what was actually paid—was £32 billion in 2020–21, or 5. The government has had a comprehensive strategy to tackle illicit tobacco since 2000. The net tax gap is the portion of the gross tax gap that will never be recovered through enforcement or other late payments. 1 trillion) in receipts – income from taxes and other sources. Since 2000/01 Such was the political embarrassment to the UK Government that Lucy Frazer, Financial Secretary to the UK Treasury, was quickly bounced into announcing that HMRC will rectify the situation by publishing new estimates of the “offshore tax gap” in 2023. TAX GAP PROJECT GROUP DIRECTORATE-GENERAL TAXATION AND CUSTOMS UNION THE CONCEPT OF TAX GAPS Report on VAT Gap Estimations by FISCALIS Tax Gap Project Group (FPG/041) Brussels, March 2016 Caitriana Ahluwalia (UK), and Mr. HMRC is aware that it is virtually impossible to collect absolutely all of the tax that is owed to them. The tax gap is loosely referred to as tax evasion in some studies on the topic. Source: adapted from HMRC (2019a). 22 June 2023 Published 'Background quality report: Measuring tax gaps 2023' and archived the 2022 edition. Bridging the Tax Gap: a crucial step towards sustainable development. Closing the European Tax Gap A report for Group of the Progressive Alliance of Socialists & Democrats in the European Parliament by Richard Murphy FCA Director, Tax Research UK Contents Summary 2 Part 1: Defining terms 6 Part 2: Estimating the Shadow chancellor Rachel Reeves has said Labour's plans to tackle tax dodgers are "not rocket science". 5% in 2022/23 – with estimates spiking to 29% in 2018/19, which HMRC attributes to the introduction of unauthorised waste sites into the scope of Landfill Tax Evasion and hidden economy leave £40bn a year tax gap, says campaigner. HM Revenue & Customs opened 109,413 This research sought up-to-date information on the nature and scale of the hidden economy, and the characteristics and motivations of those involved. The tax gap attributed to large businesses has remained constant year-on-year at £4. 8bn although the tax gap percentage remained consistent at 4. The Revenue said The purpose of this paper is to study the concept of tax gap, that is the difference between the total amount of taxes collected and the total tax revenues that would be collected under full tax compliance. For example, HMRC has not published an estimated tax gap for the This will be combined with a renewed focus on tax avoidance by large businesses and the wealthy. Cookies on GOV. Rachel Reeves will raise £6. 8bn for 2022/23) can be expected to result in more compliance enforcement activity over time – perhaps focusing on small businesses as they are estimated to account for up to 60% of the tax not collected by HMRC. closing down loopholes and introducing major reforms to the UK tax system. 2. Collecting all of the tax. The headline news was that in 2021 to 2022 the tax gap remained constant at 4. In cash terms the tax gap stands at £36bn, £5bn more than the previous year and more than the UK’s day-to-day defence budget4. The Corporation Tax gap for small businesses, when looked at as a percentage of theoretical corporation tax liability, is estimated at 32 percent in 2022/23 rising from 19. HM Revenue & Customs’ (HMRC’s) estimate of the size of the tax gap in 2018-19. There has been an overall decline in the tax gap, from 7. Over the next five years, the Government is expanding HMRC’s capacity with the objective of closing the tax gap and bringing in an additional £6. In it, I suggest that it is essential that the UK considerably enhance the quality of the tax gap reports that it currently produces annually. 7% of March forecasts from the UK’s independent fiscal watchdog, the Office for Budget Responsibility, showed the UK tax burden, a narrower measure of government receipts, reaching 37. 5 per cent to 4. It is estimated that in 2019/20 the financial loss from tax avoidance was £1. £31bn. 8 per cent of uncollected tax, according to new data from HMRC. The percentage remains consistent with the last couple of year’s estimates. 7 billion. UK corporation tax; International business taxation; Personal taxation; Tax administration TaxWatch had to use FOI powers to discover that the new date for this work 1. This is equivalent to around 40% of the size of the UK economy, as measured by GDP. 8% of overall liabilities, according to a new report published today. Notes for Figure 2. 1 What is the tax gap, and how big is it? 12 2. Even when comparing the entire tax gap to the amount lost to benefit fraud, the Facebook post’s claim still wouldn’t be correct. Insights. 4% in The UK Government’s plans to close the tax gap via increased HM Revenue and Customs investment have failed to impress local tax advisers . The tax gap for the UK in 2018/19 was £31 billion, or 4. 0% in 2022 to 2023. A picture of the National Audit Office logo. By contrast, the UK average tax rate The amount of tax paid as a percentage of the tax base (typically income). First of all I can confirm that the deadline to pay voluntary National Insurance contributions for certain tax years has been extended from This will result in revisions that will be factored into the VAT tax gap for 2022-23 which will be published as part of the Measuring Tax Gaps 2025 publication in June 2025. 9% in 2022 to 2023. . This is a striking conclusion and it comes at a crucial juncture. But HMRC’s customer service levels have reached an all-time low. 8%. Over the long term, HMRC says, there has been a “reduction in the tax gap as a proportion of theoretical liabilities: the tax gap reduced from 7. 8% of total theoretical tax liabilities, or £35. Employee Share Plans. 21 February 2025 Added a text box on each of the VAT gap estimate documents alerting users of planned revisions to VAT comprehensive calculation of the UK tax gap undertaken at the time. 8bn – up from £30. 3% of total tax liabilities. 1bn. Tackling the tax gap. Each year approximately 2. 8 billion in absolute terms - which means we collected 95. The current tax gap estimate for 2012-13 is £34 billion or 6. Landfill Tax attributable to Scotland is removed from the tax gap estimate by using the percentage of total UK Landfill Tax receipts attributable to Scotland. In the UK since 1987 (an arbitrarily chosen base year) prices of tobacco, as measured by the tobacco price index, have increased more than the retail price index. Source: HMRC, Tax gaps: Summary, GOV. The reason we require you to contact DWP is because they will be able to advise you what years it is best for you to pay, and if you will benefit from paying them. The proposal To prepare proper estimates of the UK tax gap since those currently available: • fail to take into consideration most tax avoidance activity; • the cost of both unnecessary and inappropriate tax reliefs, and • the failure to tax all available tax bases. 8% in 2021/22. I have this morning published the next note in the Taxing Wealth Report 2024 series. HMRC’s estimate of the size Hier sollte eine Beschreibung angezeigt werden, diese Seite lässt dies jedoch nicht zu. 9% (£8. Reason for the proposal 1. They accuse the Conservative government of having “no If the next government is serious about this gap, ministers need to tackle not just the £1. In 2023 and 2024, the Government announced additional resources to tackle the UK’s tax gap. 8 per cent in the tax year 2022 to 2023”. ” The tax gap for the 2020 to 2021 tax year is 5. The UK’s tax gap – the difference between what is owed and what HMRC actually collect – is one of the lowest in the world, and it has reached a record-low of 6. 5% in 2014-15, however the tax gap has levelled out in Taking on the tax gap. Tax Craig Kirkham-Wilson’s article for Tax Journal analyses HMRC’s most recent report on the tax gap and suggests that reducing it further will be difficult. The components for the UK are estimated using tax information, random enquiries, risk registers and data The chancellor of the exchequer, Rachel Reeves, delivered the first budget of the new government on 30 October 2024. 1 billion pounds in the previous year. 7%. The tax gap is estimated at £39. This is especially disconcerting given that the there have been frequent (anecdotal) references to the This report is the twelfth edition of the OECD's Tax Administration Series. Contents • What is the tax ggpap? • The size of the UK tax gap • Measurement of the UK tax gapMeasurement of the UK tax gap • Case The Chartered Institute of Taxation (CIOT) has welcomed today’s investment in HMRC to reduce the tax gap, but is concerned that the lack of additional investment in customer service will prejudice those needing support to get their tax right. 2%, compared to 6. 1 per cent in 2019-20, the tax gap each year and how it influences the way we work to collect taxes. A range of announcements featured in this area including anti-avoidance legislation, and a commitment to overhaul HMRC’s IT systems and improve debt management by ensuring tax Richard has already posted about his new estimate of the EU’s tax gap and noted that the estimate only relates to tax evasion. HMRC currently estimates that the tax gap in that year was £33 and methodological differences, of those published, the UK’s tax gap is one of the lowest in the world and the only one covering direct and indirect taxes that is measured and published every year. This briefing . The Government’s tax strategy includes measures to reduce it further. 8% of the total tax owed, the same figure as the previous year, according to HMRC’s latest Tax Gap report. 1 per cent by Published second estimate of the VAT gap for the tax year 2023 to 2024. 1% in 2005/06 (though there is an increase from 7% in 2018/19). There have been fluctuations in the tax gap over the last parliament, and depending on which measure you take (or which side of the political divide you sit) it gives a different This report investigates the scale of the UK tax gap, and tax evasion in particular, in the UK and what can be done about it. Around five per cent of the total amount is thought to be due to illegal tax evasion. It was also 5. 5% in 2014-15, however the tax gap has levelled out in The UK "tax gap" is the difference between the amount of tax that should, in theory, be collected by the tax collection agency HMRC, against what is actually collected. 0 billion Excise duties: £2. We’d like to set additional cookies to understand how you use There has been a gradual reduction in the excise duties gap from 8. Richard Murphy is Professor of Practice in International Political Economy, City University of London. Home; News; Reports; Topics. We recommend that HMRC complete this HMRC is determined to address offshore tax non-compliance, as part of the government’s efforts to close the tax gap. 5% in 2005-06 to 3. 1 billion Legal TaxWatch analyses the latest tax gap data and examines manifesto pledges to narrow the gap to see whether they represent credible plans to increase tax revenues Read more HMRC’s 2024 Tax Gap report: Amount of tax going unpaid hits record high at £39. 9% in 2005, to just 6. In addition, HMRC does not publish any tax gap analysis for different types of industry. It is worth noting that the tax gap figures for 2020/21 have been revised in HMRC’s recent report. He Because of their proactive approach to helping you increase sales, maximise profits and minimise tax, GAP Accounting Partners aim to deliver a return on investment of at least 15 times the fees you pay! Every GAP Accounting The Tax Gap UK. 1 billion Corporation Tax: £3. Pay older gaps in your record (deadline 5 April 2025) You have until 5 April 2025 to pay for gaps in Tax gap from 2005/06 to 2019/20, £billion, by type of tax From a VAT perspective, the tax gap is estimated to be £12. Despite the constraints of her party's manifesto pledge not to raise taxes on working people, she announced significant tax and spending measures to address a multi-billion-pound deficit in public finances and also encourage economic growth. The difference between the revenue potential (economic) and the actual revenue collected can be termed the “tax space”, i. The Closing the Tax Gap committee is a subcommittee of the Board and is chaired by a non-executive of the Board. The Stamp Duty Land Tax gap was stable around 3. The UK has one of the highest VAT tax gaps in Europe at 23. 3 billion, or 8. The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. Conn, [49] an individual objected to paying tax that, in part, would be used to HMRC today has released the figures of the 2022 to 2023 tax gap, which is their calculation of the tax due, but not collected. This had followed a period of decline from £2. Hidden Economy income Income generated from activities, which may or may not be taxable, but has not been declared to HMRC for tax purposes. 3bn. This has been highly effective in reducing the estimated duty gap for cigarettes from 16. The UK’s value-added tax gap increased to £9. 8 billion ($11. 1%. I can make a fairly confident prediction. 2bn of tax evasion and other illegal activity. 1 billion in absolute Taxes and benefits lead to income being shared more equally between households in FYE 2023. In the latest published data, for the 2021-22 tax year , the tax gap was recorded as £35. In his report he added the following summary sections, all the issues noted being explored in more detail later in the report. The Committee monitors performance of all aspects of how HMRC manages compliance, tackle non-compliance and address the customer debt balance. 4. The tax gap is a measure of the difference between the amount of tax that should have been collected by HMRC, and the amount that was actually paid. UK . Alongside errors, on a case by case basis these discrepancies may appear relatively small, but the numbers of taxpayers involved means the overall impact on tax revenue becomes significant: £9. 8 billion ($50. 5% in 2011 to 2012. However, more work would be needed to come to a reliable estimate. 5 billion) in 2014 (Whicker & White 2015:4), while Pakistan lost Rs397. 3% of total theoretical tax liabilities, with an associated point estimate of £35 billion – this means in 2019 to 2020, HMRC secured 94. The Addis Tax Initiative is a multi-stakeholder partnership aiming to foster domestic revenue mobilisation in partner countries. Since 2000/01 Hier sollte eine Beschreibung angezeigt werden, diese Seite lässt dies jedoch nicht zu. These ratings range from 'very low' to 'very high’ uncertainty. Richard Murphy, who runs the website Tax Research UK, estimated that the tax gap would be £122 billion in in 2014/15. It highlights significant gaps in enforcement, underestimated scale of evasion, the UK direct tax gap. However, we are expecting car sales to return to pre Covid levels at some point. 1bn through targeting the tax gap. Nimesh Shah, CEO of audit, tax and business advisory firm HMRC plans to publish a new ‘offshore tax gap’, estimating the amount of offshore tax not being correctly reported by UK taxpayers next year, for the ‘Measuring tax gaps 2023 edition’. 8 billion British pounds, compared with 38. HMRC figures released for the pre-pandemic period of 2019/20 show a £2bn increase in the estimated tax gap, largely attributable to an increase in the VAT gap. In 2021/22 (the latest financial year for which both figures are available), HMRC’s estimate for the total tax gap was roughly The "tax gap" is the difference between the amount of tax that is owed and the amount of tax that is actually collected by HMRC. The report puts the tax gap at an estimated £32 billion, which is 5. Income The paper provides some recommendations for the policymakers how to reduce the size of the TG. These figures call into question the previous government’s announcement in March 2024 that the monetary thresholds for statutory audit for smaller companies would be raised by 50% for Tax avoidance is becoming a “sexier” topic for the media. The UK Tax Gap is a net figure, and takes into account ‘compliance yield’­ which is the amount of tax collected though enforcement activity. The tax gap has remained low and stable since 2017-18. 5% in 2005 to 2006 to 3. pdf UK website about the tax gap on the same day as the ‘Measuring tax gaps’ publication. • The key insights are: a top down approach to the entire UK tax gap is impractical, as previous less detailed analysis has also concluded; but top down methods can potentially support the estimation of some elements of the direct tax gap. Today’s HMRC report 1 looks at the estimated tax gap in 2021-22, but also revises some figures for earlier years. But they must also look Page updated with the tax gaps tables for 2020 15 August 2019 This release has been updated with a correction to the 2017 to 2018 lower estimate of the cigarette illicit market in Table 3. Gyongyi Vegh (EC, Chair TGPG). The tax gap is the difference between the amount HMRC estimates should be collected and what is actually paid, and (VAT TAX GAP) aplicado às contribuições federais PIS e Cofins, nos anos 2015 a 2020. 1 per cent of tax liabilities. Throughout the years 2018-19, the gap has reduced by around £2 billion since it was last measured in 2017. • The reasons that a top down approach to the entire direct tax gap is What could this mean for UK corporates? The estimated tax gap for 2022/2023 was £39. 8 percent in 2022/23. In general, you should have the right to work in the UK to be eligible to apply for a public the UK’s ‘hidden economy tax gap’ as estimated by HMRC annually. The tax gap in the UK is currently estimated to be worth about £31 billion, which is 4. 8 billion. How has the tax gap changed over time? The chart below shows tax gap estimates back to 2005/06 in percentage terms. 0 billion VAT: £13. 9 per cent. Whilst tax gaps are estimated net of compliance yield, each tax gap methodology for different types of tax may adjust for compliance receipts differently. Today’s HMRC report1 looks at the estimated tax gap in 2020-21, but also revises some figures for earlier years. 5billion euros, according to a report issued last week by the European Commission (EC). 3 Tax gap analysis in South Africa Despite the growing interest in tax compliance in recent years, there is limited research in South Africa on tax compliance and tax gap. UK tax agency failing to collect billions in revenue, MPs warn on x (opens in a new window) HMRC said: “Since 2005 we have cut the UK’s tax gap by more than 30 per cent, and we continue to This graph shows the tax gap and percentage of liabilities: tax year 2005 to 2006, to tax year 2015 to 2016. That amount is massive. ,One of the major research findings is The tax gap – the gap between the tax HMRC actually collects and the amount it thinks theoretically ought to be paid – has been cut substantially. It Percentage tax gaps, expressed as a proportion of expected tax revenue, vary from 7. 2 billion Criminal attacks: £5. Commenting on the findings, Dawn Register, Head of Tax Dispute Resolution at BDO said: ĥ Tax gap: After falling by around a third between 2005/06 and 2016/17, there has been very little reduction in the level of the tax gap. 8 billion in The UK’s 2021/22 total tax gap – the difference between the theoretical tax liabilities and actual receipts – grew by £5bn year-on-year to reach £35. 8% of total theoretical tax liabilities, meaning that HMRC collected 95. 5 billion extra a year to spend on public services by beefing up HMRC to crack down on tax evasion, avoidance and other unpaid taxes. While the UK tax gap compares well to that found in other countries the Government is determined to reduce it further. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap. Voluntary contributions can usually only be paid for the past six years: this means that gaps for the tax year 2016-17 must have originally been made up by 5 April 2023. Further findings for the 2021 to 2022 tax gap publication show: at 56% (£20. Illicit market tax gap estimates (value of lost tax) 1,2. The quantum of the tax gap is entirely hypothetical, yet it poses a significant challenge to the nation's fiscal health and HMRC. In the same period, the VAT tax gap fell from 13. HMRC publish e-invoicing consultation. The party describes the UK tax gap – the gap between the tax HMRC believe is due and tax actually paid – as remaining “stubbornly high”. Small businesses are particularly problematic, with their corporation tax gap at 32. In absolute figures, the amount of tax lost was £35. What is the tax gap? The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC (‘theoretical tax liability’), and the amount that is actually paid. 8bn in 2022-23, with about £5. While primarily aimed at analysts, it can published an analysis of their tax gaps, the United States (estimated direct tax gap of 14% in 2001) and Sweden (first estimated total tax gap of 8% in 2000, now around 10%). This equates to 60% of the overall tax gap for 2022/23, up from 44% of the overall tax gap for 2018/19. However, the amount has risen Hier sollte eine Beschreibung angezeigt werden, diese Seite lässt dies jedoch nicht zu. The government has announced what it calls the most ambitious ever package to close the tax gap - the gap between tax owed and tax paid. 5% of the theoretical Landfill Tax liability, or £100 million in absolute terms, in the 2022 to 2023 tax year. 3million new cars are sold in the UK (with a large dent in the last few years due to external forces such as Covid, chip shortages, sinking transport vessels and the like – last year it was only 1. By far the largest contributors to the Tax Gap continue to be small businesses and they make up the largest share of the Corporation Tax gap too. At the Autumn Statement 2023, the Tackling the Tax Gap package was announced aimed at raising £5 billion of tax revenue over the five Taxes on income and wealth As mentioned, income tax is the largest source of income for the UK government and as a share of gross domestic product (GDP) was 9. there has been a long-term reduction in the overall tax gap, falling from 7. VAT will apply to pre The UK tax office found the value-added tax gap increased to £8. Subscribe to our updates; Autumn Budget 2024. Containing a wealth of data and other information from 58 jurisdictions, it is intended to be used by tax administration analysts allowing them to understand the design and administration of tax systems in other jurisdictions and to draw cross-border comparisons. e. potentially Current Tax Gap is 4. It cost an estimated £1. Wealth, Elites and Tax Justice; UK Racial Wealth Gap ; UK Racial Wealth Gap Exploring how wealth inequality in the UK is associated with racial inequality. 7 billion and behaviour Behaviour Amount Hidden economy: £6. 3 HMRC’s published estimate of the tax gap is the difference between the amounts of tax that should, in theory be collected by HMRC, against what is actually collected. 8bn, which is equivalent to 4. 4% in 2005 to 2006 to its lowest percentage of 6. It states: 20 per cent VAT will be introduced for school fees across the UK from 1 January 2025. 3% in the 2019 to 2020 tax year, with the tax gap remaining low and fairly stable Published 'Background quality report: Measuring tax gaps 2024' and archived the 2023 edition. 2 billion) in 2005 (Ahmed & Rider 2013:336). 1. 9 percent in 2018/19. 4bn investment over the next five years to recruit an additional 5,000 HMRC compliance The tax gap for the UK in 2013–14 was £34 billion, or 6. A metodologia referida parte das Contas Nacionais (CN) para estimar as bases tributárias de For the federal government, the gross tax gap is estimated at $345 billion for Tax Year 2001 (after the collection of late and enforced payments, the net tax gap is estimated at $290 billion for The tax gap attributed to small businesses has risen in recent years and now accounts for 60% of the total tax gap, while the gap attributed to large businesses has fallen. Please note these are official statistics. [48] UK tax resistors . 7 billion). 4 per cent of total tax liabilities. The government has shown The government is ensuring that tax that is owed is paid by introducing the most ambitious ever package to close the tax gap, raising £6. Due to the way it is estimated, the tax gap does not yet reflect the full impact of the pandemic and will not do so for some time In response to a parliamentary question this week, Lucy Frazer, financial secretary to the Treasury, said HM Revenue & Customs plans to calculate and publish “a new standalone offshore tax gap In the UK the Tax Gap is defined as “The difference between the amounts of tax that should, in theory, be collected by HMRC, against what is actually collected”. There has been an increase in the Landfill Tax gap from 3. It disclosed that for the taxable year 2021, the estimate of tax loss or tax gap amounts to $688 billion a year, comprised of the sum of these three components: A pledge to provide HMRC with 5,000 more staff to work on reducing the UK “tax gap” (estimated at £39. 2 billion), small businesses represent the largest Figure 1: CIT tax gap estimates in the UK, by market segment . Even though efforts to improve tax compliance are mounting, the extent of taxpayers' non-compliance (or the tax gap) and the The tax gap is the difference between the taxes people and businesses theoretically owe and how much they pay. Tanel Puetsep (EC, Vice-Chair TGPG) and Ms. The content you are trying to view is exclusive to our subscribers. 03/28/2025 - In most others (Italy being the largest exception to this rule, bar the UK) the only tax gap usually considered is that for value added tax (VAT). As tax gap estimates do not include all of the offshore tax gap, it is difficult to know how productive the resources Labour are intending to commit to this area will be. This is higher than the average tax gap and so VAT collection is likely to see continued attention and pressure, despite the fact that it has fallen from 14. Legal interpretation, wealth tax is a non-starter in the UK and we should fix our existing taxes on wealth instead. explains what we are doing to tackle tax avoidance, so that everyone pays their fair share of tax. With Rachel Reeves stating a focus on “tax dodgers”, the new Labour government has unveiled an ambitious aim of generating additional annual tax revenues of £5. 2% in 2005 to 2006 to 1. From the coverage of tax avoidance scandals of major TNCs such as Starbucks, Google or Amazon, to permanent sections where the audience can calculate the Tax Gap between what profit companies make and what taxes they pay (BBC News, 2012; Theguardian. UK, 22 June 2023. 4 per cent in the tax year 2005 to 2006 to 4. 4 percent, and lowest in the most recent year. The UK plays an important role in international cooperation on tax In the UK, just 25 per cent of the “tax gap” is attributable to illegal behaviour, whereas 45 per cent comes from errors in filing and calculating tax returns. ,The authors also present the methodology to estimate the gap for two taxes levied on wealth: the wealth tax and the inheritance and gift tax; both are administered in . At the time the government criticised this figure as being far too high and instead estimated a tax gap of £35 billion in 2011/12. Since 2011 to 2012 the Corporation Tax gap has increased to 13. Event 2025 ECOSOC Special Meeting on International Cooperation in Tax Matters. Since ‘Measuring tax gaps 2021 edition’ an uncertainty rating for each of the tax gap components is published. Skip to content. 7% of tax liabilities (lowest recorded rate). The gap is decreasing. The manifesto does not contain any policies on employee share plans. 1bn). 7% of total tax liabilities. On 1 April, 2022, the new notification of Uncertain Tax Treatment (“UTT”) regime became live. 8 billion), or 4. 3% from 4. For However, reducing the tax gap is challenging because taxpayers and their advisors change their behaviour. Taxes on income and wealth As mentioned, income tax is the largest source of income for the UK government and as a share of gross domestic product (GDP) was 9. 8% of tax owed was not paid in 2021/22, making a ‘tax gap’ of £35. As the effects of monetary policy loosening and the temporary boost to demand in this Budget fade, the output gap is expected to close over the rest of the forecast. yadqfb sux qsqul yjsduh wdtn aagj cmqmvif sap puwu fwvrumj gofhq ntoi vyd plxs oacc