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Jun 29, 2022

Tax gap remains steady at 5.1%

Statistics published by HMRC show the estimated tax gap for the year 2020/21 is 5.1%, unchanged from the previous year and the second-lowest recorded.

The annual report estimates any discrepancy between the total amount of tax owed and the total paid by the public throughout the financial year.

In monetary terms, the tax gap for 2020/21 is £32 billion - a decrease on the 2019/20 tax year, when the tax gap stood at £34bn.

But at 5.1%, there has been no change in the gap as a percentage of total theoretical tax liabilities when compared to the previous year.

The total tax due to be paid also fell from £672bn in 2019/20 to £635bn in 2020/21 due to the COVID-19 pandemic.

Further findings in the 2020/21 tax publication included:

  • The tax gap for income tax, National Insurance and capital gains tax is 3.5%, representing 39.5% of the total tax gap by type of tax
  • The VAT gap shows a downward trend from 14.1% in 2005/06 to 7% in 2020/21
  • The corporation tax gap reduced from 11.5% in 2005/06 to 9.2% in 2020/21

Jonathan Athow, HMRC's director general for customer strategy and tax design, said:

"The vast majority of taxpayers and businesses paid the correct amount of tax owed. We want to help everyone to get their tax right as the revenue we raise helps fund our vital public services."

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