Burdensome tax system costs billions in administration

An increasingly complex tax system more people paying tax and HMRC investing in staff and IT contributed to HMRC’s costs of collecting tax rising by 15% (£563m) in real terms between 2019-20 and 2023-24 according to a National Audit Office (NAO) report.

During this period the government’s tax yield rose by 16% (£113bn) in real terms.

The NAO attributes the increase in administrative costs to several factors. First the complexity of the tax system. HMRC has estimated that the combined effect of changes announced between 2022 and 2024 will increase its costs by around £875m over the next few years.

Second income taxpayers have risen in number from 31.7 million in 2020-21 to 36.2 million in 2023-24 due to thresholds remaining at the same level since April 2022 as well as population and employment growth.

Third the...