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The UK tax gap for 2021-22 was estimated to be £35.8bn or 4.8% of theoretical tax liabilities which were £739.3bn. According to HMRC there has been a long-term reduction in the tax gap as a proportion of theoretical liabilities: the tax gap reduced from 7.5% in the tax year 2005-06 to its current level of 4.8% – remaining low and stable between the years 2017-18 and 2021-22.
As in past years HMRC attributes most of the gap to small businesses (56%) rising from 40% in 2017-18. They are followed by mid-sized and large businesses and criminals which each make up 11% of the gap.
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 6% and 5%.
The gap comprises the following behavioural components:
Behaviour ...
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