Official Statistics

Quality report: numbers of taxpayers and registered traders

Updated 28 April 2023

1. Contact

Organisation unit: Knowledge, Analysis, and Intelligence (KAI)

Name: A Herre, L Suckling

Function - Statistics Producers, Cross Cutting Statistics

Email: crosscuttingstatistics@hmrc.gov.uk

2. Statistical presentation

2.1 Data description

This publication provides an overview of the estimated number of taxpayers with a tax liability arising during the year rather than those paying tax during the year, and the number of traders registered at 31 March (with the exception of Climate Change Levy for which the data relates to the number of traders who were due to send a completed return to HMRC).

2.2 Statistical unit

The publication estimates the number of taxpayers for:

• Income Tax (IT)

• Corporation Tax (CT)

• Capital Gains Tax (CGT)

• Inheritance Tax (IHT)

It also provides figures for the number of traders/operators for:

• VAT

• Insurance Premium Tax (IPT)

• Air Passenger Duty (APD)

• Landfill Tax (LFT)

• Climate Change Levy (CCL)

• Aggregates Levy (AGL)

2.3 Statistical population

UK taxpayers with a liability for IT, CT, CGT and IHT and, UK traders registered for IPT, APD, CCL and AGL. England and Northern Ireland traders registered for LFT.

2.4 Reference area

The data covers the whole of the UK, apart from LFT which was devolved to Scotland from April 2015 and to Wales from April 2019.

2.5 Time coverage

Data in this publication now covers the last 20 tax years, from the tax year 2003 to 2004 up to the latest tax year 2022 to 2023. Data prior to this can be found in previous publications in The National Archives.

3. Statistical processing

3.1 Source data

The data for this publication is sourced from several HMRC accounting systems and includes a certain amount of forecasting.

3.2 Frequency of data collection

The data included in this statistical publication is provided on an annual basis.

3.3 Data collection

The number of taxpayers is calculated from when a tax liability arises rather than rather than the number of taxpayers paying tax in that year. Trader numbers includes traders/operators who have registered by 31 March.

3.4 Data validation

The annual data is provided by teams within HMRC and is considered reliable and accurate.

Automated data validation checks are completed as part of a reproducible analytical pipeline using R software. These checks assure the data is in the correct format and there are no missing values. The process identifies potential outliers or anomalous data through data visualisation and consideration of year on year trends and changes. Where possible, the data is compared to published figures to ensure consistency.

The process has been reviewed by multiple independent analysts.

4. Quality management

All official statistics produced by KAI, must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts adhere to best practice as set out in the ‘Quality’ pillar.

Analytical Quality Assurance describes the arrangements and procedures put in place to ensure analytical outputs are error free and fit-for-purpose. It is an essential part of KAI’s way of working as the complexity of our work and the speed at which we are asked to provide advice means there is a high risk of error which can have serious consequences on KAI’s and HMRC’s reputation, decisions, and in turn on peoples’ lives.

Every piece of analysis is unique, and as a result there is no single quality assurance (QA) checklist that contains all the QA tasks needed for every project. Nonetheless, analysts in KAI use a checklist which summarises the key QA tasks, and is used as a starting point for teams when they are considering what QA actions to undertake.

Teams amend and adapt it as they see fit, to take account of the level of risk associated with their analysis, and the different QA tasks that are relevant to the work. At the start of a project, during the planning stage, analysts and managers make a risk-based decision on what level of QA is required.

Analysts and managers construct a plan for all the QA tasks that will need to be completed, along with documentation on how each of those tasks are to be carried out and turn this list into a QA checklist specific to the project.

Analysts carry out the QA tasks, update the checklist, and pass onto the Senior Responsible Officer for review and eventual sign off.

4.1 Quality assessment

The quality assurance for these statistics adhered to the framework described above and the specific procedures undertaken were as follows:

Stage 1 - Specifying the question

Up to date documentation was agreed with stakeholders setting out:

• outputs needed and by when

• how the outputs will be used

• all parameters required for the analysis

Stage 2 – Developing the methodology

Methodology was agreed and developed in collaboration with stakeholders and others with relevant expertise, ensuring it was fit for purpose and would deliver the required outputs.

Stage 3 – Building and populating a model/piece of code

Stage 3 consists of the following steps:

• analysis was produced using the most appropriate software and in line with good practice guidance

• data inputs were checked to ensure they were fit-for-purpose by reviewing available documentation and, where possible, through direct contact with data suppliers

• QA of the input data was carried out

• the analysis was audited by someone other than the lead analyst – checking code and methodology

Stage 4 – Running and testing the model/code

Stage 4 consists of the following:

• results were compared with those produced in previous years and differences understood and determined to be genuine

• results were determined to be explainable and in line with expectations

Stage 5 – Drafting the final output

The final stage includes the following:

• checks were completed to ensure internal consistency (for example, values are consistent with published figures)

• the final outputs were independently proofread and checked

5. Relevance

5.1 User needs

This analysis is likely to be of interest to users under the following broad headings:

• national government – policy makers and MPs

• regional and local governments

• academia and research bodies

• media

• business community

• general public

5.2 User satisfaction

HMRC is committed to providing impartial quality statistics which meet our users’ needs.

To provide feedback, comments or for statistical enquiries, please use the statistical contacts named at the beginning of the report.

5.3 Completeness

Table 1 includes all available data for the last 20 financial years.

6. Accuracy and reliability

6.1 Overall accuracy

These statistics do not fall within the scope of National Statistics due to a certain amount of forecasting. However, they are based upon the best available data which goes through detailed quality assurance before publication.

6.2 Income Tax

These figures represent numbers with an Income Tax liability arising during the year and are at an individual level, but will include some businesses (for example individuals with income from self-employments or partnerships).

Income Tax estimates are based on the Survey of Personal Incomes (SPI) and show the number of individuals liable for Income Tax on income chargeable for each year, although the tax may be paid in a later year.

The SPI data for the tax year 2008 to 2009 is unavailable.

From 2021 to 2022, estimates are provisional and based upon economic assumptions consistent with the Office of Budget Responsibility’s (OBRs) March 2023 Economic and Fiscal Outlook (EFO).

The estimates in later years are provisional due to the time taken to construct the SPI datasets following the respective filing deadlines for Self Assessment returns relating to the years in question. The increase in the number of Income Tax payers from 2021-22 is driven by income growth and the low indexation in 2021-22 and subsequent freeze of the Personal Allowance.

Income Tax has been partially devolved to Scotland since April 2016 and has been partially devolved to Wales (through the Welsh rates of Income Tax) since April 2019. The figures included in this publication are the total number of UK Income Taxpayers.

Further information and analysis on Income Tax is published in the Income Tax and personal incomes statistics section on GOV.UK.

6.3 Corporation Tax

The numbers represent companies in a given year with a positive Corporation Tax liability and requirement to pay. Information on the relationship between the end of a company’s accounting period and the dates by which tax is payable is available in the Pay your CT bill section on GOV.UK.

Estimates for later years are either provisional or not yet available as returns can be filed up to a year following the end of company’s accounting period, as well as being filed late which results in delays in data becoming usable. The latest year for which provisional estimates are available is 2020 to 2021. Further information on CT numbers is also published in table 4 on GOV.UK.

There had been a steady increase in taxpayers over time in line with growth in the number of UK businesses, although there was a small reduction in 2020-21, which could be explained by the COVID-19 pandemic.

6.4 Capital Gains Tax

The estimates represent the number of individuals and trusts with a tax liability for a particular year. Estimates from the tax year 2018 to 2019 onwards are provisional and subject to revisions due to late filing and amendments, with changes to the earlier years expected to be small.

The latest year for which provisional estimates are available is 2020 to 2021. The overall number of CGT taxpayers increased by 20% when compared with the previous year, with the number of CGT liable individuals and trusts increasing by 20% and 16% respectively.

In November 2020 the Office of Tax Simplification published a report on Capital Gains Tax in which they made a recommendation to government to ‘consider more closely aligning Capital Gains Tax rates with Income Tax rates’. As a result of these recommendations and speculation in the media about potential changes to the CGT rates, some of the increase in gains and CGT in the 2020 to 2021 tax year could reflect taxpayers bringing forward disposals in response to anticipated tax rises. These recommendations were not implemented.

In addition, policy changes affecting eligibility for Business Asset Disposal relief contributed to the increase in CGT liabilities.’

These estimates are in line with the National Statistics which are also published in the Capital Gains Tax Statistics on GOV.UK.

6.5 Inheritance Tax

Estimates from the tax year 2020 to 2021 are provisional and based on economic assumptions that are consistent with the OBRs March 2023 EFO.

The figures show the number of estates passing on death paying IHT, capital transfer tax or estate duty and the number of lifetime transfers to trusts paying tax. The latter includes the number of trusts where a 10 yearly, entry or exit charge has arisen. Further information and analysis can be found in the IHT statistics section on GOV.UK.

The figures in later years remain provisional due to both the six month lag from date of death to when the tax becomes due and the subsequent time lags while the data from tax returns is available for analysis on HMRC’s databases.

The transferable nil rate band, introduced in October 2007, led to a significant reduction in the number of IHT payers in the following years. The introduction of the residence nil rate band in the tax year 2017 to 2018 reduced the number of estates liable to IHT in that year, and is expected to continue to do so, all else equal.

The number of estates liable to IHT is expected to be higher in 2020 to 2021 and 2021 to 2022 than in previous years. This is likely due to the higher expected volumes of wealth transfers that may have taken place during the early months of the COVID-19 pandemic, as well as rising asset prices over the period and the Government’s decision in March 2021 to maintain the IHT tax-free thresholds at their 2020 to 2021 levels for the coming years. HMRC cannot verify this until full administrative data becomes available.

6.6 VAT

Figures show the number of VAT registered traders as at 31st March each year. Traders have to register for VAT if their taxable turnover will exceed the registration threshold for the year in question. Traders with taxable turnovers below the registration threshold may register voluntarily. These figures are also published in the Annual VAT bulletin on GOV.UK.

There has been a long-term upward underlying trend in the VAT registered business population. In addition, the freeze in the VAT registration and de-registration thresholds has increased the number of registrations and decreased the number of de-registrations progressively from the year ending March 2019.

6.7 Insurance Premium Tax

From 2017, the data source for trader figures of IPT traders was changed. The definition of when a trader is considered to have registered or de-registered is not directly comparable between the two data sources, and as such trends observed from 2016 to 2017 are not directly comparable to those prior to this period.

6.8 Air Passenger Duty

Figures represent the number of operators registered as at 31st March each year. From 1 April 2013 APD was extended to include business jets and other smaller aircraft. Figures from the tax year 2013 to 2014 onwards do not include operators qualifying to pay APD via the Occasional Operator Scheme.

From 2017, the data source for trader figures of APD traders was changed. The definition of when a trader is considered to have registered or de-registered is not directly comparable between the two data sources, and as such trends observed from 2016 to 2017 are not directly comparable to those prior to this period.

From 2022 a further administrative data source has been used to more accurately reflect the number of overall operators, following an exercise to consolidate operator’s returns to ease their admin burdens to HMRC (and which made the previous data source unable to identify the underlying operators from those that had been consolidated).

6.9 Landfill Tax

Figures represent the number of operators registered as at 31st March each year. LFT in Scotland has been devolved since April 2015, therefore figures from the tax year 2015 to 2016 onwards are not directly comparable with earlier years.

Data from the tax year 2018 to 2019 excludes LFT devolved to Wales.

From 2017, the data source for trader figures of LFT traders was changed. The definition of when a trader is considered to have registered or de-registered is not directly comparable between the two data sources, and as such trends observed from 2016 to 2017 are not directly comparable to those prior to this period.

The fall over recent years is due to operators moving away from landfill to other methods of dealing with waste.

6.10 Climate Change Levy

Data relates to the number of operators who were due to send a completed return to HMRC. Data in the tax year 2001 to 2002 relates to the period June 2001 to March 2002 when it was introduced. From 2013 to 2014 the figures include Carbon Price Floor taxpayers which came into effect from 1 April 2013, and is a tax on fossil fuels used in the generation of electricity.

6.11 Aggregates Levy

Figures represent the number of operators registered as at 31st March each year.

From 2017, the data source for trader figures of AGL traders was changed. The definition of when a trader is considered to have registered or de-registered is not directly comparable between the two data sources, and as such trends observed from 2016 to 2017 are not directly comparable to those prior to this period.

6.12 Sampling error

As no sampling is necessary, sampling error is not an issue.

6.13 Non-sampling error

Coverage error

This publication includes all taxpayers with a liability arising during the year and registered traders at 31 March, therefore coverage error is not relevant.

Measurement error

Traders who have not registered by 31 March and taxpayers who file returns late or after the tax year when the liability arose could affect the statistics produced.

For some taxes there is a time delay between the return being completed and administrative data becoming available and therefore more recent figures are provisional until confirmed.

Non-response error

In general, non-response error is not applicable to these statistics as they are not based on a survey. Though traders who do not register or taxpayers who do not complete returns will not be captured in the publication.

Processing error

It is possible that errors exist in the programming code used to analyse the data and produce the statistics. This risk is reduced through developing a good understanding of the complexities of the data, and thoroughly reviewing and testing the programs that are used.

6.14 Data revision

The United Kingdom Statistics Authority (UKSA) Code of Practice for Official Statistics requires all producers of Official Statistics to publish transparent guidance on the policy for revisions. HMRC has published a statistics revisions policy which aims to avoid the need for unscheduled revisions to publications unless they are absolutely necessary and put systems and processes in place to minimise the number of revisions.

The annual figures included in this publication remain provisional until the figures can be confirmed by HMRC.

7. Timeliness and punctuality

7.1 Timeliness

These statistics are published in April on an annual basis. This timeline allows sufficient time for processing the data, analysis and to complete quality assurance checks of these statistics when the data becomes available at the end of the tax year.

7.2 Punctuality

In line with the Official Statistics Code of Practice, these statistics are pre-announced in the HMRC statistics release calendar.

HMRC also publishes an annual publication plan on the announcements page. As part of the Code of Practice for Official Statistics, any changes to the schedule will be stated and detailed on this page.

8. Coherence and comparability

8.1 Geographical comparability

This analysis is presented for a single region - the United Kingdom, excluding LFT which was devolved to Scotland from April 2015 and to Wales from April 2019.

8.2 Comparability over time

The publication includes data were available for the last 20 financial years, starting from 2003 to 2004.

There have been some policy changes for several taxes included in this publication, which may have some effects on comparability, as described in the Accuracy and reliability section.

The time series for LFT figures are not directly comparable over time due to the tax being devolved to Scotland from April 2015 and to Wales from April 2019.

From 2017, the data source for trader figures of AGL, LFT, APD and IPT traders was changed. The definition of when a trader is considered to have registered or de-registered is not directly comparable between the two data sources, and as such trends observed from 2016 to 2017 are not directly comparable to those prior to this period.

8.3 Coherence - cross domain

The number of taxpayers for several taxes included in this publication (IT, CT, CGT, IHT and VAT) are also published in other HMRC publications. Quality assurance checks are performed to ensure the data included in this publication is consistent with the latest versions of other published statistics and any differences are genuine and understood.

Coherence - sub annual and annual statistics

All statistics are presented as annual outputs. No coherence issues exist.

9. Accessibility and clarity

9.1 News release

There were no press releases linked to this data over the past year.

9.2 Publication

The tables and associated commentary are published on the Numbers of taxpayers and registered traders statistics webpage of GOV.UK.

The table of figures is published in OpenDocument format.

The table of figures and this quality report comply with the accessibility regulations set out in the Public Sector Bodies (Websites and Mobile Applications) Accessibility Regulations 2018.

Further information can be found in HMRC’s accessible documents policy and GOV.UK guidance and tools for digital accessibility.

9.3 Online databases

This data is not available in any online databases.

9.4 Micro-data access

Micro-data access is currently not available.

9.5 Documentation on methodology

All up-to-date information on the methodology is found on this webpage.

9.6 Quality documentation

All official statistics produced by KAI, must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts adhere to best practice as set out in the ‘Quality’ pillar.

Information about quality procedures for this analysis can be found in the Quality management section of this document.

10. Cost and respondent burden

These estimates are required by HMRC for planning and performance reasons. Publication represents a minor additional burden and minimal additional cost. Effort has been made to automate the production of these statistics to some extent, increasing the efficiency of the process.

It is estimated to take about 5 days full-time equivalent (FTE) to produce the annual analysis and publication after the data has been provided by teams in HMRC. Additional time is taken by teams to source and QA the figures before they are provided.

11. Confidentiality

11.1 Confidentiality - policy

HMRC has a legal duty to maintain the confidentiality of taxpayer information. This is set out by the Commissioners for Revenue and Customs Act 2005.

This analysis complies with this requirement.

11.2 Confidentiality - data treatment

The statistics in these tables are presented at a highly aggregate level, so identification of any individual person or organisation is minimised.

If a potential risk did exist, statistical disclosure control would be applied to cells within the tables. Statistical disclosure control is the application of methods to ensure confidential data is not disclosed to parties who don’t have authority to access it.

Statistical disclosure control modifies data so that the risk of data subjects being identified is within acceptable limits while making the data as useful as possible.

If a cell within a table is determined to disclose confidential data, its contents would be suppressed either by removing the data or combining categories.

Further information on anonymisation and data confidentiality best practice can be found on the Government Statistical Service’s website.