Official Statistics

1. Tax gaps: Summary

Updated 23 June 2026

The provisional estimate of the tax gap is

6.4% of total theoretical tax liabilities, or £59.2 billion in absolute terms, in the 2024 to 2025 tax year.

Total theoretical tax liabilities for the year were £924.4 billion.

Headline tax gap estimates

Headline tax gap estimates are:

• the provisional estimate of the UK tax gap in 2024 to 2025 is estimated to be 6.4% of total theoretical tax liabilities, or £59.2 billion in absolute terms, which means HMRC collected 93.6% of all tax due

• the tax gap as a proportion of total theoretical tax liabilities has reduced from 7.5% in the tax year 2005 to 2006 to 6.4% in 2024 to 2025; there has been some fluctuation in the intervening years

• the tax gap for VAT reduced from 14.1% in 2005 to 2006 to 6.6% in 2024 to 2025, although there have been fluctuations in recent years

• the tax gap for Income Tax, National Insurance contributions and Capital Gains Tax increased from 4.5% in 2005 to 2006 to 5.3% in 2013 to 2014 and has since reduced to 4.0% in 2024 to 2025

• the tax gap for Corporation Tax has been broadly stable with some fluctuation between 2005 to 2006 and 2018 to 2019; there was a step change in 2019 to 2020 partly reflecting improvements in data collection and an increase from 15.6% in 2019 to 2020 to 18.1% in 2024 to 2025

• the tax gap for excise duty reduced from 8.3% in 2005 to 2006 to 5.5% in 2024 to 2025

• the largest components of the tax gap by tax type in 2024 to 2025 are the Corporation Tax gap and the Income tax, National Insurance contributions and Capital Gains Tax gap both with a 35% share, followed by the VAT gap with a 20% share of the overall tax gap

• the tax gap from small businesses is the largest component of the tax gap by customer group with a 62% share in 2024 to 2025; the tax gap from individuals makes up the lowest proportion of the tax gap at 4% in 2024 to 2025

These figures are our best estimates at the time of publication. Uncertainty ratings and revisions for each component of the tax gap are available in each chapter.

Overview

What the tax gap estimates show since tax year 2005 to 2006 up to 2024 to 2025

The percentage tax gap gives us a better measure of compliance over time. It considers the effects of inflation, economic growth and changes to tax rates, whereas the cash figure does not. For instance, in a growing economy where the tax base is increasing, even if the percentage tax gap remained level, the absolute terms value would grow.

Figure 1.1 shows the tax gap time series in absolute terms and as a percentage of theoretical tax liability. The 2 most recent years (2023 to 2024 and 2024 to 2025) are projections due to data lags, further information can be found in the ‘Methodological annex’. There is emerging evidence that the small businesses Corporation Tax gap may be understated for years before 2019 to 2020, and therefore may not be directly comparable to later years. To aid interpretation, the chart includes an indicative range above the estimate for years up to 2019 to 2020 showing where a future, revised tax gap could be. This is not an official statistic. Development work is underway to improve the historic series for future publications.

The tax gap has fallen over the long-term, from 7.5% in 2005 to 2006 to 6.4% in 2024 to 2025, although there has been some fluctuation over the period.

The long-term decrease in the percentage tax gap is because the tax gap in absolute terms has grown more slowly than total theoretical tax liabilities (£ billion). While the tax gap has increased, from £32.8 billion in 2005 to 2006 to £59.2 billion in 2024 to 2025, total theoretical tax liabilities have grown faster, more than doubling from £438.2 billion to £924.4 billion.

Figure 1.1: Tax gap by value and as a percentage of theoretical tax liabilities, 2005 to 2006 up to 2024 to 2025

Notes for Figure 1.1:

1. The full data series can be seen in the online tables.
2. Figures for previous years have been revised following methodological improvements and incorporating more up-to-date data.
3. To aid interpretation, the chart includes an indicative range of where a future, revised tax gap could be. This is not an official statistic. Development work is underway to improve the historic series for future publications.

As in ‘Measuring tax gaps 2025’ edition the percentage tax gap for tax types is the same between this section and the separate published tax gap figures in subsequent chapters. However, for some of the components we use published receipts figures where liability figures are not available. Self Assessment, PAYE and Corporation Tax use liability figures whereas VAT, excise duties and all other remaining taxes use receipts figures.

Tax gap by type of tax

Main findings

Figure 1.2 shows the tax gap as a proportion of the theoretical tax liabilities between 2005 to 2006 and 2024 to 2025 for the overall tax gap, as well as broken down into its components — VAT; excise duties; Income Tax, National Insurance contributions and Capital Gains Tax; Corporation Tax; and other taxes.

Most of the components follow a long-term downward trend between 2005 to 2006 and 2024 to 2025, though there is often some volatility in the time series. The VAT gap has the largest proportionate fall from 14.1% to 6.6%. The excise duties gap shows a smaller proportionate fall from 8.3% in 2005 to 2006 to 5.5% in 2024 to 2025. While the tax gap for ‘other’ taxes has remained relatively constant around 4%.

The Corporation Tax gap has been broadly stable with some fluctuation between 2005 to 2006 and 2018 to 2019. There was a step change between 2018 to 2019 and 2019 to 2020 partly reflecting improvements in data collection and it has since increased to 18.1% in 2024 to 2025.

The Income Tax, National Insurance contributions and Capital Gains Tax gap has increased from 4.5% in 2005 to 2006 to 5.3% in 2013 to 2014 and has since reduced to 4.0% in 2024 to 2025.

Figure 1.2 Tax gap by tax type as a percentage of total theoretical tax liabilities

Notes for Figure 1.2:

1. The full data series can be seen in the online tables.
2. IT, NICs and CGT stands for ‘Income Tax, National Insurance contributions and Capital Gains Tax’.

Figure 1.3 shows the tax gap broken down into different taxes in the last 5 years. Overall, the relative shares have been broadly stable. In 2024 to 2025, Corporation Tax accounted for 35% of the tax gap, compared with 32% in 2020 to 2021. Income Tax, National Insurance contributions and Capital Gains Tax accounted for between 30% and 35% over the period. VAT accounted for around 20% in both 2020 to 2021 and 2024 to 2025, although it was higher at 29% in 2022 to 2023.

Figure 1.3 Tax gap by type of tax — share of tax gap, 2020 to 2021 to 2024 to 2025

Notes for Figure 1.3:

1. The full data series can be seen in the online tables.

2. IT, NICs and CGT stands for ‘Income Tax, National Insurance contributions and Capital Gains Tax’.

Tax gap by customer group

Every year, HMRC collects revenues from millions of individuals and businesses of all sizes. To help us do this, we segment our customers into groups so we can identify their needs and risks more accurately and tailor our responses — whether that is by providing appropriate support to help customers get their tax right, or by taking targeted action to tackle avoidance, evasion and criminal activity.

Tax gap measurements are aligned with this customer segmentation, so we can use the insights gained to improve how we manage these customer groups:

• individuals

• wealthy individuals

• small businesses

• mid-sized businesses

• large businesses

• criminals

We use the tax gap to understand what drives non-compliance and to provide a foundation for our compliance strategy.

Main findings

Figure 1.4 shows the tax gap broken down into different customer group for tax years from 2020 to 2021 to 2024 to 2025.

In 2024 to 2025 small businesses accounted for 62% of the tax gap, up from 58% in 2020 to 2021.

Large businesses accounted for around 12% of the tax gap over the period, while mid-sized businesses accounted for a smaller share, decreasing from 9% to 7%.

The share attributed to criminals fell from 13% to 8%. The share for individuals remained stable at around 4%, while the share for wealthy individuals increased from 4% to 6%.

Figure 1.4 Tax gap by customer group — share of tax gap

Year	Small businesses	Large businesses	Criminals	Mid-sized businesses	Wealthy	Individuals
2020-21	58%	12%	13%	9%	4%	4%
2021-22	62%	10%	10%	8%	5%	4%
2022-23	61%	13%	9%	8%	4%	4%
2023-24	62%	13%	9%	7%	5%	4%
2024-25	62%	12%	8%	7%	6%	4%

Notes for Figure 1.4:

1. The full data series can be seen in the online tables.

Measurement methods

There are several approaches to measuring tax gaps. The total tax gap is estimated using established statistical methods and illustrative methods. The way we estimate each tax gap component and the data we use is set out in the relevant chapters, with additional information in the ‘Methodological annex’.

Top-down estimates

A ‘top-down’ approach uses independent, external data on consumption to calculate a theoretical value of tax that should be paid. The actual amount of tax paid is subtracted from this theoretical value to estimate the tax gap. VAT and excise duties gaps are mainly estimated using a ‘top-down’ approach.

Bottom-up estimates

In ‘bottom-up’ approaches, HMRC uses internal data and operational knowledge to identify areas of potential tax loss. Most components for direct taxes are estimated using a ‘bottom-up’ approach, based on HMRC’s operational data and management information such as:

• random enquiry programmes — these involve undertaking compliance checks for a randomly selected sample of customers and scaling up the findings from the sampled cases to the relevant full population
• statistical methods — unlike random enquiry programmes, these use risk-based enquiries that are not representative of the whole population and require statistical methods to scale up the results to the whole population

Illustrative estimates

Illustrative methodologies, formerly called experimental methodologies, are used to produce estimates where there is no direct measurement data. For these tax gap components, we use the best available data, simple models and assumptions to build an illustrative estimate of the tax gap.

Main findings

Figure 1.5 shows what proportion of the total tax gap was classed as established or illustrative in the last 5 editions of ‘Measuring tax gaps’.

This shows 88% of the ‘Measuring tax gaps 2026 edition’ tax gap is estimated using established methods. The remaining 12% is estimated using illustrative methods. A longer series across editions is provided in the Methodological annex.

Figure 1.5: Share of total gap by established and illustrative methodologies over the past 5 ‘Measuring tax gaps editions’

Measuring tax gaps edition	Established methodology	Illustrative methodology
MTG22	79%	21%
MTG23	84%	16%
MTG24	86%	14%
MTG25	87%	13%
MTG26	88%	12%

Notes for Figure 1.5:

1. MTG stands for ‘Measuring tax gaps’.
2. Figures may not sum due to rounding.
3. ‘%’ refers to percentage of the total tax gap.

Accuracy and reliability

Our tax gap estimates are official statistics produced to the highest levels of quality and adhere to the UK Statistics Authority’s Code of Practice for Statistics framework. This framework ensures statistics are trustworthy, good quality, valuable and provide producers of official statistics with the detailed practices they must commit to when producing and releasing official statistics.

A ‘Measuring tax gaps’ background quality report accompanies this statistical release, providing information about the quality of outputs, as set out by the Code of Practice for Statistics. This sets out the measures we have taken to ensure the accuracy and reliability of the tax gap estimates.

The figures presented in the ‘Measuring tax gaps 2026 edition’ are our best estimates based on the information available, but there are sources of uncertainty and potential error. For this reason, it is best to focus on the trend in the results rather than the absolute numbers when interpreting findings.

Revisions to tax gap estimates

Many tax gap component estimates have been revised since ‘Measuring tax gaps 2025 edition’. This is due to improvements in the way they are calculated, the availability of more up-to-date data and projections based on more recent years’ information. These tax gap estimates adhere to the framework for the Code of Practice for Statistics. This code assures revisions or corrections are handled transparently and released as soon as practicable.

Main findings

HMRC have identified an error in the ‘Measuring tax gaps 2025 edition’ official statistics published in June 2025. This error caused an underestimation of the Inheritance tax gap and resulted in an underestimation of the overall tax gap in 2022 to 2023 of 0.1 percentage points. More information can be found in ‘6. Tax gaps: Other taxes’.

The corrected UK tax gap for ‘Measuring tax gaps 2025’ is estimated to be 5.7% of total theoretical tax liabilities (£46.5 billion) in 2022 to 2023 (0.1 percentage points and £0.1 billion higher than previously published).

Figure 1.6 shows the revisions made to the overall tax gap estimates since the ‘Measuring tax gaps 2025 edition’. This illustrates the uncertainty around the estimation of tax gaps and highlights why they are best used as a long-term indicator of compliance.

Figure 1.6: Revisions to the tax gap as a percentage of total theoretical tax liabilities compared to ‘Measuring tax gaps 2025 edition’

Note for Figure 1.6:

1. MTG stands for ‘Measuring tax gaps’.

The main reasons for the revisions include updated information on consumer expenditure from the Office for National Statistics to produce the VAT gap estimate, additional information through completed random enquiry programmes, and methodological improvements.

Further information on the revision for each component of the tax gap is available within the relevant chapters:

• VAT revisions

• Excise revisions

• Income Tax, National Insurance contributions and Capital Gains Tax revisions

• Corporation Tax revisions

• Other taxes revisions

Uncertainty

Uncertainty relates to a range of factors that can affect the accuracy and robustness of a statistic, including the impact of measurement or sampling error (related to sample surveys) and all other sources of bias and variance that exist in a data source.

To evaluate the uncertainty of our tax gap estimates in a systematic and transparent way, we assign an uncertainty rating for each tax gap component, ranging from ‘very low’ to ‘very high’. The rating is derived from assessing the uncertainty arising from 3 sources: the model scope, the methodology used, and the data underpinning the estimate.

In assessing model scope, we evaluate each estimate’s methodology’s capture of the appropriate tax base and its coverage of the entire potential taxpayer population and all potential forms of non-compliance. In assessing the methodology used, we assess the complexity and challenges of the model including the quality and impact of assumptions. In assessing the data underpinning the estimate, we consider data suitability and its impact, including sensitivity analysis.

More information on the tax gap uncertainty assessment can be found in the ‘Methodological annex’, including a table showing all components of the tax gap and their uncertainty ratings.

The distribution of uncertainty ratings has changed since their introduction in ‘Measuring tax gaps 2021 edition’.

Main findings

Figure 1.7 shows the uncertainty ratings for all tax gap components. In ‘Measuring tax gaps 2026 edition’, the share of the tax gap with ‘high’ uncertainty has increased to around a third (35%), up from around 8% in ‘Measuring tax gaps 2025 edition’. This increase is driven by small businesses Corporation Tax moving from the ‘medium’ to the ‘high’ category.

As a result, the share attributed to models with a ‘medium’ uncertainty rating has fallen to just over half (51%) of the tax gap, compared to 79% in ‘Measuring tax gaps 2025 edition’.

The proportion of the tax gap estimate with ‘very high’ uncertainty has been broadly stable between 13% and 15% in the last 4 editions.

Figure 1.7: Share of tax gap by uncertainty rating compared to the previous 5 editions

Measuring tax gaps edition	Very low	Low	Medium	High	Very high
MTG22	0%	31%	40%	12%	18%
MTG23	0%	21%	51%	13%	15%
MTG24	0%	20%	56%	9%	15%
MTG25	0%	0%	79%	8%	13%
MTG26	0%	0%	51%	35%	14%

Notes for Figure 1.7:

1. MTG stands for ‘Measuring tax gaps’.
2. Figures may not appear to sum due to rounding.
3. ‘%’ refers to percentage of the total tax gap.

Tax gap development programme

As official statistics, our tax gap estimates are produced with the highest levels of quality assurance and adhere to the Code of Practice for Statistics framework. This code assures objectivity and integrity — providing the framework to ensure that statistics are trustworthy, good quality, and valuable. It also provides producers of official statistics with the detailed practices they must commit to when producing and releasing official statistics.

To ensure our statistics continue to be trustworthy, good quality, and valuable, we have a continuous development programme. As part of this we publish:

• a summary of the improvements to the estimates introduced in the current edition of ‘Measuring tax gaps’ publication
• a high-level summary of development priorities to improve the tax gap estimates in future editions of the ‘Measuring tax gaps’ publication.

HMRC have a continuous programme of development to improve and strengthen our tax gap estimates. However, not all tax gap methodologies can be improved due to limited data availability and the balancing of costs to produce the data against the value they add to the estimates. HMRC has limited resource to produce statistics. We also must maintain and assure the quality of existing estimates, including when there are changes to data sources.

The following list provides a summary of methodological and data improvements introduced in ‘Measuring tax gaps 2026 edition’.

1. Rolling averages are now used in tax gap estimates for Self Assessment and PAYE small businesses from 2022 to 2023 and 2024 to 2025 respectively, following reductions in sample sizes.
2. Redrafted methodological annex to improve clarity and align it with the current publication structure.
3. Updated selected online tables to improve presentation and consistency.

Future priorities for the tax gap

HMRC continues to review and improve its tax gap estimates and publication. The following list provides a high-level summary of planned developments. These are subject to change, and timings depend on resource availability.

1. Publish a stand-alone customs duty gap. Development of a customs duty gap is a priority for HMRC and a methodology using a random enquiry programme is being piloted.
2. Continue development of a stand-alone offshore tax gap, with the aim to publish in 2027.
3. Improve the assessment of the tax gap arising from wealthy taxpayers.
4. Improve the assessment of the tax gap arising from small businesses, to better understand the potential understatement in the tax gap before 2019 to 2020.

Measuring tax gaps tables

A full set of the ‘Measuring tax gaps’ tables and tax gap time series is published on GOV.UK. These have been revised and updated for methodological revisions detailed in this publication up to and including 2024 to 2025.