By GB News (Politics) | Created at 2026-06-23 15:16:39 | Updated at 2026-06-23 16:23:31
1 hour ago
The Government faces a £59.2billion shortfall from unpaid taxes despite attempts by the Treasury to bolster revenue, according to shocking HM Revenue and Customs (HMRC).
Small businesses make up nearly two-thirds of the UK’s "tax gap" while Chancellor Rachel Reeves targets employers with recent hikes to National Insurance and National Living Wage.
Based on the latest figures, the tax authority collected £865.2billion in total over the 2024 to 2025 tax year, making up 93.6 per cent of all tax due.
As a result, there is an estimated "tax gap" of 6.4 per cent, which is the difference between what tax the Treasury expects to rake in and what is actually paid out.
The Chancellor still faces a tax shortfall despite recent hikes
Based on the figures, non-compliance by small businesses made up 62 per cent of the 2024-25 gap, which is the largest share across all customer groups.
Analysts note this is primarily due to unpaid corporation tax, which saw its own overall "gap" jump to 18.1 per cent in the last financial year.
The largest driver of unpaid tax is attributed to the inability to take reasonable care due to carelessness and negligence, with error coming in at second.
According to HMRC, tax evasion accounted for 12 per cent of 2025/26's "tax gap".
How big has Britain's 'tax gap' become?
HMRC
Rachael Griffin, tax and financial planning expert at Quilter, said: "Closing even a fraction of the £59.2billion tax gap could play a meaningful role in supporting the public finances without the need for further headline tax rises.
"Improving how the system works in practice, particularly for small businesses and those newly entering self-assessment, may prove just as important as any changes to tax rates in the months ahead.
"Simplifying a tax system that continues to grow ever more complex should be high up on the to-do list."
HMRC chief executive JP Marks added: "Today’s estimates reflect the changing world in which HMRC operates, where it is becoming more difficult to tackle non-compliance through traditional approaches alone.
“That is why our aim is a well-designed modern tax system that makes it easier to get things right first time and harder to get things wrong, and which allows us to respond effectively to non-compliance and tackle criminal activity."
Notably, HMRC's figures revealed the UK's wealthiest people did not pay £3.6billion that was owed in the last financial year, which is more than the shortfall from any other individuals.
Caitlin Boswell, deputy director at Tax Justice UK, shared: "With wealth inequality spiralling and ordinary people across the UK struggling to make ends meet, it’s abhorrent that the super-rich are dodging paying their fair share.
"It’s robbing the country of the investment it needs. Any incoming Prime Minister and Chancellor must recognise the size of this problem and address it head-on to make the tax system fair and raise revenue that could make genuine improvements to people’s lives."
