Nearly £50 Billion Missing in Tax Take
- 14th July 2025
HMRC’s latest figures reveal that an estimated £46.8 billion in taxes went unpaid in the 2023/24 tax year: equivalent to 5.3% of total tax liabilities. This persistent shortfall, known as the tax gap, continues to challenge the Government's efforts to fund public services and improve tax compliance.
One of the most striking statistics is that small businesses account for 60% of the tax gap. For HMRC, this is an area of particular concern. Corporation tax non-compliance is also on the rise, with the gap climbing from 6.4% in 2011/12 to nearly 16% today.
For small company owners, increasing pressure from higher corporation tax rates and rising costs of extracting profits has led to tax-saving behaviours that may fall into grey areas:
- Some may be tempted to claim personal purchases as business expenses, such as laptops, mobile phones or tablets with minimal business use
- Others may underreport income by accepting cash payments or opting for payment in kind, depending on their trade
While some of these practices are clearly outside the rules, HMRC’s ability to investigate has been hampered by limited resources in recent years. That may soon change, however, with substantial new funding allocated for compliance activity in the latest Budget.
Forrester Boyd Tax Partner, Vicky Prior, mentioned ‘As pressure grows to reduce the tax gap, HMRC’s focus is tightening, particularly on small businesses and crypto transactions. With greater scrutiny and new compliance funding on the way, it’s vital that businesses and individuals understand their obligations and take advice where needed.’
The fast-evolving world of cryptocurrency poses an additional challenge. Non-compliance in cryptoasset transactions is believed to be high, largely due to the complexity of tracking and reporting such dealings.
Although HMRC can identify gains when cryptoassets are sold for cash, many taxpayers don’t realise that swapping one digital token for another – such as Bitcoin for Ethereum – or using tokens to make purchases are also considered disposals for capital gains tax purposes.
This remains a difficult area for both taxpayers and the tax authority, especially when cryptocurrency debit cards are used to pay for goods or services.
For more detail, HMRC’s summary of the latest tax gap figures can be accessed here:
https://www.gov.uk/government/statistics/measuring-tax-gaps/1-tax-gaps-summary
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
