UK tax gap drops to record low

The difference between what tax should be paid and the amount that HMRC actually receives fell to a record low in 2018/19.

HMRC collected £628 billion in tax receipts for 2018/19, which equated to more than 95% of what was owed.

Continuing a long-term downward trend, the so-called ‘tax gap' has steadily fallen from 7.5% in 2005/06 to 4.7% in 2018/19.

The UK's tap gap arises partly because some taxpayers make errors in calculation, but also from tax evasion and criminal behaviour.

Any impact on the tax gap from COVID-19 will be seen first in the receipts from the 2020/21 tax year.

Jesse Norman, Financial Secretary to the Treasury, said:

"The coronavirus pandemic has highlighted the importance of everyone playing their part and paying the tax that is due.

"Having a secure and comprehensive tax base allows the Government to pay for public services, and to provide financial support in a crisis."

Jim Harra, chief executive at HMRC, added:

"Our role is to make it straightforward for taxpayers to get it right, first time, while also tackling the minority who set out to cheat the system."

Talk to us for tax-planning advice.