The estimated tax gap for the 2023 to 2024 tax year is £46.8 billion.
- The government has announced plans to raise a further £7.5 billion through its measures to close the tax gap.
- The largest share of the gap is from small business non-compliance.
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, James Murray 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.
