Latest news with #taxgap
Telegraph
13 hours ago
- Business
- Telegraph
Wealthy taxpayers underpay £2.1bn despite HMRC crackdown
Wealthy individuals underpaid more than £2bn in taxes last year despite a crackdown on hidden earnings. HMRC estimates the amount of uncollected tax from the richest people rose from £1.9bn to £2.1bn in the financial year ending April 2024. The so-called 'tax gap' – the difference between taxes the taxman expects to be paid and the amount actually collected – is estimated to be worth £46.8bn. Wealthy people avoided approximately £200m more in taxes in the previous financial year, figures released by HMRC suggest. In the last three years, the amount individuals are underpaying in tax has increased by around 17pc per year on average, according to analysis by UHY Hacker Young. The figure stood at £1.4bn in 2020-21, increasing to £2.1bn in 2023-24 – or 50pc over those three years. The taxman suspects the uncollected taxes are the result of loopholes in the law and illegal tax evasion. It comes after the Government set out plans to raise billions of pounds in extra revenues by clamping down on unpaid taxes. James Murray, the Exchequer Secretary, said: 'We are determined to go further and faster to make sure everyone pays their fair share. 'In our first year in office, we have set out plans to raise an extra £7.5bn through the most ambitious ever package to close the tax gap.' It comes as Rachel Reeves, the Chancellor, is also poised to water down Labour's tax raid on non-domiciled UK residents by reversing a decision to charge inheritance tax on their worldwide assets. Neela Chauhan, partner at accountants UHY Hacker Young, said: 'These numbers tell you where we can expect HMRC to launch its crackdown – against wealthy people, where unpaid tax is rising. 'Rachel Reeves has allocated substantial new resources to HMRC to step up tax investigations, we expect that to translate into unannounced visits by the taxman and more aggressive mailshots from HMRC to individuals it suspects of underpaying tax.' Small businesses were blamed for making up the largest share of unpaid taxes, at 60pc. Wealthy individuals were responsible for just 10pc by comparison. HMRC has zeroed in on high net-worth individuals it suspects of underpaying tax in recent years. It defines a wealthy individual as someone earning more than £200,000 a year or with assets over £2m in any of the last three years. There were 850,000 wealthy individuals in 2023-24 who together paid £119bn in personal taxes – a quarter of the nation's personal tax bill. Since 2019-20, the amount of revenue HMRC has collected from wealthy individuals through investigations and other compliance work has shot up from £2.2bn to £5.2bn.
Yahoo
17 hours ago
- Business
- Yahoo
HMRC reveals surge in corporation tax gap and small business non-compliance
Corporation tax accounts for nearly half of Britain's £46.8 billion tax gap amid a rise in non-compliance from small businesses, according to the latest figures from HM Revenue & Customs. HMRC revealed the corporation tax gap – the difference between the amount of tax expected to be due and what was actually paid – made up 40% of the total UK gap in 2023-24. The corporation tax gap jumped to 15.8% – its highest for more than a decade – in the year to April 2024. The data shows that by customer group, small businesses are the largest component of the tax gap, at a 60% share, up from 48% five years ago. HMRC said small business non-compliance is driving the rise. The overall UK tax gap eased back from an upwardly revised 5.6%, or £46.4 billion in 2022-23, to 5.3% in 2023-24. This means £46.8 billion was unpaid in the 2023-24 tax year, with HMRC collecting £829.2 billion, representing 94.7% of all tax due. Rachael Griffin, tax and financial planning expert at Quilter, said the rise in the corporation tax gap is the 'standout concern' in the data. 'That's a red flag for policymakers, especially as economic uncertainty and global tax competition continue to put pressure on business revenues,' she said. She added the rise is 'likely driven by a mix of economic strain, increased complexity in the global tax system, and perhaps a lag in HMRC enforcement capacity'. She added: 'Another persistent pressure point is the UK's small business sector… this underscores the ongoing challenge of ensuring compliance in a large, diverse and often under-supported part of the economy.' But the figures show progress in personal tax collection, with the VAT gap falling to 5% from 13.8% in 2005-06, and the income tax, national insurance and capital gains tax gap dropping to 3% from a high of 5.3% in 2013-14. HMRC said the combined share of the tax gap attributed to individuals and the wealthiest now accounts for just 10% of the overall. Ms Griffin cautioned: 'However, with frozen thresholds and lower allowances, for dividends and capital gains in particular, more people are being pulled into the tax system for the first time, often without realising it. 'That raises the risk of accidental non-compliance, especially where income is irregular or reporting requirements are poorly understood.' The figures come amid a storm of controversy surrounding HMRC amid worries over its customer service and falling public confidence in the tax system. HMRC was also recently victim to a phishing scam, which saw £49 million lost and tens of thousands of tax accounts breached. James Murray, Exchequer Secretary to the Treasury, said: 'Every pound of tax uncollected puts a greater burden on honest taxpayers and deprives our public services of vital funding. 'In our first year in office, we have set out plans to raise an extra £7.5 billion through the most ambitious ever package to close the tax gap. 'We are determined to go further and faster to make sure everyone pays their fair share.'
The Independent
18 hours ago
- Business
- The Independent
HMRC reveals surge in corporation tax gap and small business non-compliance
Corporation tax accounts for nearly half of Britain's £46.8 billion tax gap amid a rise in non-compliance from small businesses, according to the latest figures from HM Revenue & Customs. HMRC revealed the corporation tax gap – the difference between the amount of tax expected to be due and what was actually paid – made up 40% of the total UK gap in 2023-24. The corporation tax gap jumped to 15.8% – its highest for more than a decade – in the year to April 2024. The data shows that by customer group, small businesses are the largest component of the tax gap, at a 60% share, up from 48% five years ago. HMRC said small business non-compliance is driving the rise. The overall UK tax gap eased back from an upwardly revised 5.6%, or £46.4 billion in 2022-23, to 5.3% in 2023-24. This means £46.8 billion was unpaid in the 2023-24 tax year, with HMRC collecting £829.2 billion, representing 94.7% of all tax due. Rachael Griffin, tax and financial planning expert at Quilter, said the rise in the corporation tax gap is the 'standout concern' in the data. 'That's a red flag for policymakers, especially as economic uncertainty and global tax competition continue to put pressure on business revenues,' she said. She added the rise is 'likely driven by a mix of economic strain, increased complexity in the global tax system, and perhaps a lag in HMRC enforcement capacity'. She added: 'Another persistent pressure point is the UK's small business sector… this underscores the ongoing challenge of ensuring compliance in a large, diverse and often under-supported part of the economy.' But the figures show progress in personal tax collection, with the VAT gap falling to 5% from 13.8% in 2005-06, and the income tax, national insurance and capital gains tax gap dropping to 3% from a high of 5.3% in 2013-14. HMRC said the combined share of the tax gap attributed to individuals and the wealthiest now accounts for just 10% of the overall. Ms Griffin cautioned: 'However, with frozen thresholds and lower allowances, for dividends and capital gains in particular, more people are being pulled into the tax system for the first time, often without realising it. 'That raises the risk of accidental non-compliance, especially where income is irregular or reporting requirements are poorly understood.' The figures come amid a storm of controversy surrounding HMRC amid worries over its customer service and falling public confidence in the tax system. HMRC was also recently victim to a phishing scam, which saw £49 million lost and tens of thousands of tax accounts breached. James Murray, Exchequer Secretary to the Treasury, said: 'Every pound of tax uncollected puts a greater burden on honest taxpayers and deprives our public services of vital funding. 'In our first year in office, we have set out plans to raise an extra £7.5 billion through the most ambitious ever package to close the tax gap. 'We are determined to go further and faster to make sure everyone pays their fair share.'
