Taxgap sameas lastyear

Statistics published by HM Revenue and Customs (HMRC) reveal the estimated tax gap for the 2020 to 2021 tax year is 5.1 per cent – the second lowest recorded percentage – and is unchanged from the previous year.

The annual Measuring Tax Gaps publication estimates the difference between the total amount of tax expected to be paid and the total amount of tax actually paid during the financial year. The majority of taxpayers pay the tax that is owed.

In monetary terms, the tax gap for the 2020 to 2021 tax year is £32 billion.

At 5.1 per cent, there has been no change in the percentage tax gap compared to the previous year, although the monetary value has fallen by £2 billion from £34 billion in the 2019 to 2020 tax year.

The total tax due to be paid fell from £672 billion in 2019 to 2020 to £635 billion in 2020 to 2021 due to the economic impact of Covid.

Jonathan Athow, HMRC’S director general for customer strategy and tax design, said: “The vast majority of taxpayers and businesses paid the correct amount of tax owed. We want to help everyone to get their tax right as the revenue we raise helps fund our vital public services.”

The estimate for the 2020 to 2021 tax gap is the best assessment based on the evidence available at this time.

There is some uncertainty for the tax gap estimates for the first year of the pandemic and estimates could be subject to revisions.

HMRC has published tax gap estimates since the 2005 to 2006 tax year. There has been a long-term reduction in the overall tax gap from 7.5 per cent in 2005 to 2006, to 5.1 per cent in the 2020 to 2021 tax year.

The reduction is a result of the government’s action to help taxpayers get their tax right first time.