The government has announced plans to raise an additional £7.5 billion through a range of measures to close the tax gap – the difference between how much tax is expected to be paid and how much is actually paid. 

Figures published by HMRC on 19 June show that £46.8 billion in tax went unpaid in the 2023-24 tax year.  This equates to 5.3% of the total tax due, with over £829 billion of tax being collected overall in 2023-24.

The data shows that:

• small businesses represent the largest proportion of the tax gap – 60%
• and Corporation Tax accounts for 40%.

With failure to take reasonable care (31%), error (15%) and tax evasion (14%) highlighted as the main reasons for the gap.

HMRC plans

With this in mind, the government has set out three priorities for HMRC:

• To close the tax gap
• To improve customer service
• To modernise and reform the tax and custom system.

To help achieve these goals, £1.7 billion is to be spent over four years to fund more HMRC staff, including 5,500 compliance officers and 2,400 debt management roles. 

In addition, the Making Tax Digital (MTD) programme continues to expand, with the aim of reducing the tax gap from errors and failure to take reasonable care.  MTD for VAT is predicted to raise over £4 billion in tax revenue over the next four years by reducing errors.

Moreover when Making Tax Digital for Income Tax (MTD for ITSA) is introduced in April 2026, it is expected to generate £1.95 billion in additional tax revenue by 2030.

Making Tax Digital for Income Tax

MTD for ITSA represents a major change in the way businesses, self-employed individuals and landlords will report tax.  If you need any advice or support preparing for this, please contact us.

Internet links: 
HMRC press release
HMRC guide to MTD for ITSA