Uncollected tax from small businesses rises to 40%

HMRC have released Measuring Tax Gaps 2025 the latest tax gap estimates covering 2023/24. Headline statistics include the overall tax gap which was 5.3% of total theoretical tax liabilities (£46.8bn) up from 4.8% (£39.8bn) in the previous tax year.

Of particular note the corporation tax gap increased to 15.8% (£18.6bn) – up from 13.9% in 2022/23. The increase in the CT tax gap mostly reflects uncollected tax from small businesses with the gap for that sector standing at 40.1% of theoretical tax liability (£14.7bn). HMRC’s figures also reveal that that the proportion of small businesses submitting an incorrect CT return with underdeclared tax liability increased to 53% in 2021/22 with around three quarters of those who submitted incorrect returns having additional CT liability of more than £1 000. For mid-sized businesses the tax gap was 6% (£1.5bn) and 4.2% (£2.3bn) for large businesses....