Tax gap for 2020-21 is second lowest recorded

The UK tax gap for 2020-21 was estimated to be £32bn which is 5.1% of theoretical tax liabilities. This is the second lowest recorded percentage and is unchanged from the previous year. However the monetary value has fallen by £2bn. The total tax due to be paid fell from £672bn in 2019-20 to £635bn in 2020-21 which HMRC says is due to the economic impact of Covid-19.

As in past years HMRC attributes most of the gap to small businesses (£15.6bn or 48%) with large businesses coming in fourth at 11% (£3.6bn). Criminals are the second largest component making up 16% (£5.2bn) of the gap followed by mid-sized businesses at 12% (£3.9bn).

Individuals and wealthy taxpayers – defined as an individual with an income of more than £200 000 or assets of more than £2m – account for the smallest share at 8% and...