Tax gap for 2022-23 hits £39.8bn

The UK tax gap for 2022-23 was estimated to be £39.8bn or 4.8% of theoretical tax liabilities which were £823.8bn according to HMRC data.

HMRC states that there has been a long-term reduction in the tax gap as a proportion of theoretical liabilities - reducing from 7.4% in the tax year 2005-06 to its current level of 4.8%.

Small businesses are responsible for most of the tax gap (60%) says HMRC. It notes that this proportion has increased over the past five years from 44% in 2018-19. They are followed by mid-sized and large businesses which each make up 11% of the gap.

The share of the tax gap due to criminals has fallen from 11% in 2021-22 to 9% in 2022 to 2023. Wealthy taxpayers and individuals make up a low proportion of the tax gap at 5% each.

The gap comprises the following behavioural...