5. Tax gaps: Corporation Tax
Updated 23 June 2026
© Crown copyright 2026
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/statistics/measuring-tax-gaps/5-tax-gaps-corporation-tax
Total Corporation Tax
Summary
The Corporation Tax gap is estimated using 3 components:
-
the small businesses Corporation Tax gap is estimated using an established bottom-up methodology using random enquiry programme (REP) data
-
the mid-sized businesses Corporation Tax gap is estimated using an established bottom-up statistical methodology
-
the large businesses Corporation Tax gap is estimated using an established bottom-up statistical methodology
To evaluate the uncertainty of our Corporation Tax gap, we assign an uncertainty rating for each tax gap component, ranging from ‘very low’ to ‘very high’. The small businesses Corporation Tax gap has ‘high’ uncertainty, the mid-sized and large businesses Corporation Tax gaps both have ‘medium’ uncertainty.
More information on the tax gap uncertainty assessment can be found in the ‘Methodological annex’.
Figure 5.1 shows the Corporation Tax gap time series in absolute terms and as a percentage of theoretical Corporation Tax liability. 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 for Corporation Tax is 18.1% of the theoretical Corporation Tax liability, or £21.0 billion in absolute terms, in the tax year 2024 to 2025.
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 components of the Corporation Tax gap are projected in line with Corporation Tax liabilities from 2023 to 2024 for small businesses and large businesses, and from 2022 to 2023 for mid-sized businesses.
Figure 5.1: Corporation Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2024 to 2025
Notes for Figure 5.1:
-
The full data series can be seen in the online tables.
-
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.
Figure 5.2 shows the small businesses, mid-sized businesses, large businesses and all businesses Corporation Tax gaps as a proportion of theoretical tax liabilities. The percentage tax gap estimates for small businesses Corporation Tax are the highest across the time series and large businesses Corporation Tax the lowest.
The increase in the Corporation Tax gap from 11.0% in 2018 to 2019 to 18.3% in 2021 to 2022 is primarily due to increases in the small businesses tax gap, which increased from 24.3% to 42.4% in the same period.
Figure 5.2 Corporation Tax gap as a percentage of theoretical tax liabilities
Notes for Figure 5.2:
-
The full data series can be seen in the online tables.
-
Further details of the customer group classification are available in the Chapter 1 and in the ‘Methodological annex’.
Main findings
Figure 5.3 shows the Corporation Tax gap, tax liability, and the theoretical tax liability, which is the sum of the tax gap and tax liability, since 2020 to 2021.
The net tax gap has increased from £12.0 billion in 2020 to 2021 to £21.0 billion in 2024 to 2025. In the same period Corporation Tax liability has increased from £54.4 billion to £94.7 billion. This results in £115.7 billion theoretical tax liability in 2024 to 2025.
Figure 5.3: Corporation Tax gap, tax liability and theoretical tax liability, since 2020 to 2021 (£ billion)
| Year | Net tax gap | Liability | Theoretical tax liability |
|---|---|---|---|
| 2020-21 | 12.0 | 54.4 | 66.4 |
| 2021-22 | 14.8 | 66.0 | 80.8 |
| 2022-23 | 18.3 | 83.6 | 102.0 |
| 2023-24 | 19.6 | 91.5 | 111.1 |
| 2024-25 | 21.0 | 94.7 | 115.7 |
Notes for Figure 5.3:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
-
Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.
Figure 5.4 shows the Corporation Tax gap, and its components: gross tax gap, compliance yield and non-payment since 2020 to 2021. The Corporation Tax gap is calculated as the gross tax gap minus compliance yield plus non-payment.
The gross tax gap has increased from £12.9 billion in 2020 to 2021 to £23.5 billion in 2024 to 2025. Compliance yield increased from £1.5 billion to £3.1 billion over the last 5 years. Non-payment has stayed between £0.5 billion and £0.7 billion between 2020 to 2021 and 2024 to 2025.
Figure 5.4: Components of the Corporation Tax gap since 2020 to 2021 (£ billion)
| Year | Gross tax gap | Compliance yield | Non-payment | Net tax gap |
|---|---|---|---|---|
| 2020-21 | 12.9 | 1.5 | 0.6 | 12.0 |
| 2021-22 | 15.6 | 1.3 | 0.5 | 14.8 |
| 2022-23 | 20.5 | 2.7 | 0.6 | 18.3 |
| 2023-24 | 22.2 | 3.1 | 0.5 | 19.6 |
| 2024-25 | 23.5 | 3.1 | 0.7 | 21.0 |
Notes for Figure 5.4:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
Revisions
Figure 5.5 shows the revisions to the Corporation Tax gap since the publication of the ‘Measuring tax gaps 2025 edition’.
The Corporation Tax gap for 2019 to 2020 through to 2022 to 2023 has been revised upwards, mainly due to increases in the small businesses Corporation Tax gap derived from REP data. The small businesses Corporation Tax gap estimate for 2022 to 2023 is now based on REP data rather than being projected from 2021 to 2022.
Figure 5.5: Revisions to Corporation Tax gap since the ‘Measuring tax gaps 2025 edition’
Notes for Figure 5.5:
-
The full data series can be seen in the online tables.
-
MTG stands for ‘Measuring tax gaps’.
Corporation Tax for small businesses
Main findings
Figure 5.6 shows the small businesses Corporation Tax gap time-series in absolute terms and as a percentage of small businesses theoretical Corporation Tax liability.
The tax gap for small businesses Corporation Tax is 44.6% of the small businesses theoretical Corporation Tax liability, or £17.3 billion in absolute terms, in the 2024 to 2025 tax year.
The small businesses 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. The small businesses Corporation Tax gap has since increased from 34.6% in 2019-20 to 44.8% in 2022-23. The estimates are projected in line with small businesses Corporation Tax liability from 2023 to 2024.
There is emerging evidence that the small businesses Corporation Tax gap may be understated prior to 2019 to 2020. This reflects improvements since 2019 to 2020 in how compliance activity is undertaken and recorded, resulting in more complete identification of non-compliance in recent years.
As a result, estimates before and after 2019 to 2020 may not be directly comparable. Changes over time may reflect both improved measurement and changes in underlying behaviour, which cannot be robustly separated using current data.
To aid interpretation, the charts include an indicative range showing where a future, revised tax gap could be. This range is based on applying more recent observed levels of non-compliance to earlier years. It is presented to illustrate the potential scale of understatement in the historic series. The range is not an official statistic.
HMRC is undertaking further development to improve the historic series and provide a more consistent time series in future publications.
Figure 5.6: Small businesses Corporation Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2024 to 2025
Notes for Figure 5.6:
-
The full data series can be seen in the online tables.
-
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.
Figure 5.7 shows the small businesses Corporation Tax gap, tax liability and the theoretical tax liability, which is the sum of the tax gap and tax liability, since 2020 to 2021.
The net tax gap has increased from £9.5 billion in 2020 to 2021 to £17.3 billion in 2024 to 2025. In the same period small businesses Corporation Tax liability has increased from £14.9 billion to £21.4 billion. This results in £38.7 billion small businesses Corporation Tax theoretical tax liability in 2024 to 2025.
The small businesses Corporation Tax gap is projected in line with liabilities from 2023 to 2024, so we see a similar growth in the net tax gap estimates in those years.
Figure 5.7: Small businesses Corporation Tax gap, tax liability and theoretical tax liability, since 2020 to 2021 (£ billion)
| Year | Net tax gap | Liability | Theoretical tax liability |
|---|---|---|---|
| 2020-21 | 9.5 | 14.9 | 24.5 |
| 2021-22 | 12.7 | 17.2 | 29.9 |
| 2022-23 | 15.0 | 18.5 | 33.6 |
| 2023-24 | 16.1 | 20.0 | 36.1 |
| 2024-25 | 17.3 | 21.4 | 38.7 |
Notes for Figure 5.7:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
-
Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.
Figure 5.8 shows the small businesses Corporation Tax gap, and its components: gross tax gap, compliance yield and non-payment since 2020 to 2021. The small businesses Corporation Tax gap is calculated as the gross tax gap minus compliance yield plus non-payment.
The small businesses Corporation Tax gross gap has increased from £9.3 billion in 2020 to 2021 to £17.1 billion in 2024 to 2025. Compliance yield has been broadly stable between £0.1 billion and £0.2 billion. Non-payment has been broadly stable between £0.3 billion and £0.4 billion.
Figure 5.8: Components of the small businesses Corporation Tax gap, since 2020 to 2021 (£ billion)
| Year | Gross tax gap | Compliance yield | Non-payment | Net tax gap |
|---|---|---|---|---|
| 2020-21 | 9.3 | 0.1 | 0.4 | 9.5 |
| 2021-22 | 12.4 | 0.1 | 0.3 | 12.7 |
| 2022-23 | 14.8 | 0.1 | 0.3 | 15.0 |
| 2023-24 | 16.0 | 0.2 | 0.3 | 16.1 |
| 2024-25 | 17.1 | 0.2 | 0.4 | 17.3 |
Notes for Figure 5.8:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
Additional findings
Figure 5.9 shows that the proportion of small businesses submitting an incorrect Corporation Tax return with under-declared tax liability increased from 20% in 2018 to 2019 to 55% in 2022 to 2023.
There is emerging evidence that the small businesses Corporation Tax gap may be understated prior to 2019 to 2020. This reflects improvements since 2019 to 2020 in how compliance activity is undertaken and recorded, resulting in more complete identification of non-compliance in recent years.
As a result, estimates before and after 2019 to 2020 may not be directly comparable. Changes over time may reflect both improved measurement and changes in underlying behaviour, which cannot be robustly separated using current data.
Around three quarters of those who submitted incorrect returns did so with an additional Corporation Tax liability of over £1,000, and around one quarter with an additional Corporation Tax liability of less than £1,000.
Figure 5.9: Proportion of small businesses with incorrect Corporation Tax returns where additional liability established
Notes for Figure 5.9:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest 1 percent.
-
Figures may not sum due to rounding.
Revisions
Figure 5.10 shows the revisions to the small businesses Corporation Tax gap since the publication of the ‘Measuring tax gaps 2025 edition’.
The small businesses Corporation Tax gaps for the 2018 to 2019 through to 2022 to 2023 years are revised upwards following the inclusion of REP data, identifying greater non-compliance than previously forecast.
Settlement data on closed cases for previous years and updates to forecast values of REP cases that remain open has led to small changes in the tax gap estimates across the time-series.
We expect there may be future revisions to the small business Corporation Tax estimates before 2019 to 2020, to address possible historic underreporting of non-compliance. We therefore urge significant caution comparing pre and post 2018 to 2019 estimates. This will form part of our development programme ahead of ‘Measuring tax gaps 2027 edition’.
Figure 5.10 Revisions to small businesses Corporation Tax gap since the ‘Measuring tax gaps 2025 edition’
Notes for Figure 5.10:
-
The full data series can be seen in the online tables.
-
MTG stands for ‘Measuring tax gaps’.
Corporation Tax for mid-sized businesses
Main findings
Figure 5.11 shows the mid-sized businesses Corporation Tax gap time series in absolute terms and as a percentage of mid-sized businesses theoretical Corporation Tax liability.
The tax gap for mid-sized businesses Corporation Tax is 5.9% of the mid-sized businesses theoretical Corporation Tax liability, or £1.5 billion in absolute terms, in the 2024 to 2025 tax year.
Prior to 2016 to 2017 the mid-sized businesses Corporation Tax gap was quite volatile but has since became more stable, and reduced to a projected 5.9% in 2024 to 2025.
The estimates are projected in line with mid-sized businesses Corporation Tax liability from 2022 to 2023.
Figure 5.11: Mid-sized businesses Corporation Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2024 to 2025
Notes for Figure 5.11:
- The full data series can be seen in the online tables.
Figure 5.12 shows the mid-sized businesses Corporation Tax gap, tax liability, and the theoretical tax liability, which is the sum of the tax gap and tax liability, since 2020 to 2021.
The net tax gap has increased from £1.3 billion to a projected £1.5 billion over the last 5 years. This increase is consistent with a reducing percentage tax gap, and is due to an increase in liabilities over this period. Mid-sized businesses Corporation Tax liability has increased from £13.7 billion in 2020 to 2021 to £23.5 billion in 2024 to 2025. The theoretical tax liability has increased from £14.9 billion to £25.0 billion.
Figure 5.12: Mid-sized businesses Corporation Tax gap, tax liability and theoretical tax liability, since 2020 to 2021 (£ billion)
| Year | Net tax gap | Liability | Theoretical tax liability |
|---|---|---|---|
| 2020-21 | 1.3 | 13.7 | 14.9 |
| 2021-22 | 1.1 | 17.5 | 18.6 |
| 2022-23 | 1.3 | 20.3 | 21.6 |
| 2023-24 | 1.4 | 22.4 | 23.7 |
| 2024-25 | 1.5 | 23.5 | 25.0 |
Notes for Figure 5.12:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
-
Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.
Figure 5.13 shows the mid-sized businesses Corporation Tax gap, and its components: gross tax gap, compliance yield and non-payment since 2020 to 2021. The mid-sized businesses Corporation Tax gap is calculated as the gross tax gap minus compliance yield plus non-payment.
The gross tax gap and compliance yield are both projected in line with mid-sized businesses Corporation Tax liability for the latest 3 years.
The gross tax gap increased from £1.2 billion in 2020 to 2021 to a projected £1.4 billion in 2024 to 2025. Compliance yield has been broadly stable between £0.1 billion and £0.2 billion over the last 5 years. Non-payment has remained stable around £0.2 billion over the last 5 years.
Figure 5.13: Components of the mid-sized businesses Corporation Tax gap since 2020 to 2021 (£ billion)
| Year | Gross tax gap | Compliance yield | Non-payment | Net tax gap |
|---|---|---|---|---|
| 2020-21 | 1.2 | 0.1 | 0.2 | 1.3 |
| 2021-22 | 1.1 | 0.1 | 0.2 | 1.1 |
| 2022-23 | 1.2 | 0.2 | 0.2 | 1.3 |
| 2023-24 | 1.4 | 0.2 | 0.2 | 1.4 |
| 2024-25 | 1.4 | 0.2 | 0.2 | 1.5 |
Notes for Figure 5.13:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
Revisions
Figure 5.14 shows the revisions to the mid-sized businesses Corporation Tax gap since the publication of the ‘Measuring tax gaps 2025 edition’.
As compliance cases can take many years to close, the compliance yield of open cases is forecasted. Estimates are likely to be revised between publications due to differences between forecast and actual compliance yield.
For ‘Measuring tax gaps 2026 edition’ the extreme values methodology used to estimate the lower bound has been improved, resulting in very minor revisions to the tax gap. Further detail can be found in the ‘Methodological annex’.
There have also been revisions in the mid-sized businesses Corporation Tax liability compared to previous publications. These factors have caused revisions from 2014 to 2015 onwards.
Figure 5.14: Revisions to mid-sized businesses Corporation Tax gap since ‘Measuring tax gaps 2025 edition’
Notes for Figure 5.14:
-
The full data series can be seen in the online tables.
-
MTG stands for ‘Measuring tax gaps’.
Corporation Tax for large businesses
Main findings
Figure 5.15 shows the large businesses Corporation Tax gap time series in absolute terms and as a percentage of large businesses Corporation Tax liability.
The tax gap for large businesses Corporation Tax is 4.3% of the large businesses theoretical Corporation Tax liability, or £2.3 billion in absolute terms, in the 2024 to 2025 tax year.
The large businesses Corporation Tax gap declined from 8.7% in 2005 to 2006 to 3.0% in 2017 to 2018. The gap has since increased to 4.3% in 2024 to 2025.
These tax gap estimates are projected in line with large businesses Corporation Tax liability from 2023 to 2024.
Figure 5.15: Large businesses Corporation Tax gap by value and as a percentage of theoretical tax liabilities, 2005 to 2006 up to 2024 to 2025
Notes for Figure 5.15:
- The full data series can be seen in the online tables.
Figure 5.16 shows the large businesses Corporation Tax gap, tax liability, and the theoretical tax liability, which is the sum of the tax gap and tax liability, since 2020 to 2021.
The net tax gap has increased from £1.2 billion to a projected £2.3 billion over the last 5 years. This increase is consistent with a stable percentage tax gap, when comparing 2024 to 2025 with 2020 to 2021, and is due to an increase in liabilities over this period. Large businesses Corporation Tax liability has increased from £25.8 billion in 2020 to 2021 to £49.7 billion in 2024 to 2025. Theoretical tax liability has increased from £27.0 billion to £52.0 billion over this period.
Figure 5.16: Large businesses Corporation Tax gap, tax liability and theoretical tax liability, since 2020 to 2021 (£ billion)
| Year | Net tax gap | Liability | Theoretical tax liability |
|---|---|---|---|
| 2020-21 | 1.2 | 25.8 | 27.0 |
| 2021-22 | 1.0 | 31.3 | 32.3 |
| 2022-23 | 2.0 | 44.8 | 46.8 |
| 2023-24 | 2.2 | 49.1 | 51.3 |
| 2024-25 | 2.3 | 49.7 | 52.0 |
Notes for Figure 5.16
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
-
Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.
Figure 5.17 shows the large businesses Corporation Tax gap, and its components: gross tax gap, compliance yield and non-payment since 2020 to 2021. The large businesses Corporation Tax gap is calculated as the gross tax gap minus compliance yield plus non-payment.
The gross tax gap and compliance yield are both projected in line with large businesses Corporation Tax liability from 2023 to 2024.
The gross tax gap increased from £2.4 billion in 2020 to 2021 to a projected £4.9 billion in 2024 to 2025. Compliance yield increased from £1.3 billion in 2020 to 2021 to a projected £2.7 billion in 2024 to 2025. Non-payment has remained stable at £0.1 billion over the 5 years.
Figure 5.17: Components of the large businesses Corporation Tax gap, since 2020 to 2021 (£ billion)
| Year | Gross tax gap | Compliance yield | Non-payment | Net tax gap |
|---|---|---|---|---|
| 2020-21 | 2.4 | 1.3 | 0.1 | 1.2 |
| 2021-22 | 2.1 | 1.1 | 0.1 | 1.0 |
| 2022-23 | 4.4 | 2.5 | 0.1 | 2.0 |
| 2023-24 | 4.9 | 2.7 | 0.1 | 2.2 |
| 2024-25 | 4.9 | 2.7 | 0.1 | 2.3 |
Notes for Figure 5.17:
-
The full data series can be seen in the online tables.
-
Figures are rounded to the nearest £0.1 billion.
-
Figures may not sum due to rounding.
Revisions
Figure 5.18 shows the revisions to the large businesses Corporation Tax gap since the publication of the ‘Measuring tax gaps 2025 edition’.
As compliance cases can take many years to close, the compliance yield of open cases is forecasted. Estimates are likely to be revised between publications due to differences between forecast and actual compliance yield.
For ‘Measuring tax gaps 2026 edition’ the extreme values methodology used to estimate the lower bound has been improved, resulting in revisions to the tax gap. Further detail can be found in the ‘Methodological annex’.
There have also been revisions in the large businesses Corporation Tax liability compared to previous publications. These factors have caused revisions from 2014 to 2015 onwards.
Figure 5.18: Revisions to large businesses Corporation Tax gap since the ‘Measuring tax gaps 2025 edition’
Notes for Figure 5.18:
-
The full data series can be seen in the online tables.
-
MTG stands for ‘Measuring tax gaps’.