Official Statistics

Second estimate of the VAT gap (tax year 2024 to 2025)

Updated 3 March 2026

An Official Statistics release. Published 3 March 2026.

1. What is the VAT gap?

The VAT gap is measured by comparing the net VAT total theoretical liability (VTTL) with net VAT receipts. This compares the amount of VAT HMRC expects to receive and the VAT HMRC actually receives. The VAT gap is reported here both as a difference between VTTL and receipts (point estimate), and as a percentage of VTTL. The VAT gap methodology uses a ‘top-down’ approach.

2. Second estimate of the VAT gap for tax year 2024 to 2025

The table below shows the headline figures used to produce the second VAT gap estimate for tax year 2024 to 2025.

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Tax year	Net VAT total theoretical liability	HMRC net VAT receipts	Net VAT receipts related to net VAT total theoretical liability in 2024 to 2025	VAT gap (point estimate)	VAT gap (per cent)
2024 to 2025	£182.6 billion	£170.9 billion	£170.7 billion	£11.9 billion	6.5

The amounts calculated are rounded to the nearest £0.1 billion and the VAT gap as a percentage has been rounded to the nearest 0.1 per cent. Net VTTL and net VAT receipts are expressed net of payments and repayments. A portion of the VTTL estimate is projected rather than actual expenditure.

The second estimate of the VAT gap for 2024 to 2025 at 6.5% (£11.9 billion) shows an increase in percentage terms compared with the estimate of the VAT gap for 2023 to 2024 of 5% (£8.9 billion) published in ‘Measuring tax gaps 2025 edition’. The second estimate remains lower than the 2022 to 2023 estimate of 7.8% (£13.1 billion), in the same publication.

There has been an upward revision of 0.3 percentage points to the second estimate of the VAT gap for 2024 to 2025 compared with the preliminary estimate (previously 6.2%). This represents a £0.5 billion upward revision to the VAT gap in pound terms from the preliminary estimate (£11.4 billion).

Since the preliminary estimate, the latest ONS Blue Book 2025 and ONS Consumer Trends data Quarter 3 have been included.

As per the preliminary estimate, the 2024 to 2025 net receipts figure in the VAT gap model includes adjustments to account for policies which affect VAT payments which are received in one year, and accrued in another. This adjustment to VAT receipts ensures when estimating the VAT gap for 2024 to 2025 that only the net VAT receipts which related to the net VAT total theoretical liability (net VTTL) in 2024 to 2025 are included. This figure is shown in a separate column in table above, ‘Net VAT receipts related to net VAT total theoretical liability in 2024 to 2025’.

3. Details of HMRC’s VAT gap publications

HMRC publishes three estimates of the VAT gap for the latest tax year each year: the first in the autumn, the second in the following spring, and the third as part of HMRC’s ‘Measuring tax gaps’ publication in the summer.

The preliminary estimate of the VAT gap for 2024 to 2025 was published at Autumn Budget 2025 on 26 November 2025. It was based on a full year of household expenditure data in line with ONS Consumer Trends data published on 30 September 2025 - which accounts for around 70% of the VTTL. This data aligns with the ONS National Accounts Blue Book 2025, which was published on 31 October 2025. For the preliminary estimate publication, HMRC used the ONS National Accounts Blue Book 2024 non-household data up to 2023 to 2024 and is forecast using the Office for Budget Responsibility (OBR) determinants. The Blue Book data accounts for the remaining 30% of the VTTL, and comprises government, charities, businesses making non-business supplies or supplies exempt from VAT, and housing.

This is the second estimate of the VAT gap for 2024 to 2025 and it includes the latest ONS Consumer Trends data, which was published on 23 December 2025. It also includes the latest ONS National Accounts Blue Book 2025 non-household expenditure data but continues to forecast around 30% of the 2024 to 2025 VTTL in line with the latest OBR forecasting assumptions.

HMRC will publish a VAT gap estimate for 2024 to 2025 along with an updated historical series as part of the ‘Measuring tax gaps 2026 edition’ publication in summer 2026. It is expected to include further updates, such as ONS Consumer Trends data.

Due to timing, the ‘Measuring tax gaps 2026 edition’ publication will not include the Blue Book 2026 data, therefore 30% of the 2024 to 2025 estimate will remain forecasted until the publication of ‘Measuring tax gaps 2027 edition’.

For details on assumptions provided by the OBR, go to OBR publications. For details on Blue Book data go to ‘UK National Accounts, The Blue Book time series’. For details on the Consumer Trends data go to ‘Consumer trends time series’

For details on the Measuring tax gaps publication, go to Measuring tax gaps.

4. Revisions policy

HMRC’s policy is to only publish a revised historical VAT gap series once a year, within the Measuring tax gaps publication, incorporating both new and revised data and methodological improvements together.

5. Methodology

Further information on the methodology used to estimate the VAT gap can be found in ‘Measuring tax gaps 2025 edition - Methodological annex’, Chapter D

6. User engagement

HMRC is committed to providing impartial quality statistics that meet our users’ needs. We encourage our users to engage with us so that we can improve our Official Statistics and identify gaps in the statistics that we produce.

If you have any comments or questions about these statistics then please contact the responsible statistician directly. Go to Statistics at HMRC for further information.

7. Publication info

Theme: the economy

Released: 3 March 2026

Next release: Summer 2026

© Crown copyright 2026

8. Contact

For statistical enquiries contact:

revenuemonitoring@hmrc.gov.uk

Knowledge, Analysis and Intelligence HM Revenue and Customs
100 Parliament Street
London
SW1A 2BQ

For media enquiries, contact the HMRC press office (Business and Corporate desk): 03000 550 493