ÌìÃÀÓ°Ôº

Summary

The excise duties gap estimate is the sum of 5 components:

• the beer duty gap, based on an established top-down and an established bottom-up methodology, using survey data and HMRC management information
• the spirits duty gap, based on an established top-down methodology which uses survey data to estimate the total market size and takes away the amount actually cleared (the amount of duty received by HMRC)
• the tobacco duty gap, which includes cigarettes and hand-rolling tobacco duty gaps, both based on a top-down methodology which estimates the total market size for each tobacco product and then takes away the amount actually cleared
• the hydrocarbon oils (fuel duty) gap, based on an established top-down methodology using fuel consumption data between tax years 2005 to 2006 and 2015 to 2016, and an established bottom-up methodology using random enquiry programme data for the use of illicit diesel from 2016 to 2017 onwards
• other excise duties, including betting and gaming, cider and perry, spirits-based ready-to-drinks and wine, based on an illustrative method using a weighted average from similar taxes

More information on the tax gap uncertainty assessment can be found in the ‘Methodological annex’.

Main findings

Figure 3.1 shows the excise duties gap time-series in absolute terms and as a percentage of excise duties theoretical liabilities.

There has been a gradual reduction in the excise duties gap from 8.3% in 2005 to 2006 to 5.8% in 2023 to 2024. Between 2005 to 2006 and 2011 to 2012 the excise duties gap followed a downward trend, declining from 8.3% to 5.0%. Since then, the excise duties gap has fluctuated and increased to 5.8% in 2023 to 2024.

Figure 3.1: excise duties gap by value and as a percentage of theoretical liabilities, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.1:

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

Figure 3.2 shows the time-series for the excise duties gap components: beer, spirits, tobacco, hydrocarbon oils and other excise duties gaps.

The estimate for the beer duty gap as a proportion of theoretical liabilities is the highest compared to the other components in 2023 to 2024 which, whilst showing some year-on-year volatility, increased from 9.1% in 2005 to 2006 to 16.0% in 2023 to 2024. It reached a high of 19.2% in 2020 to 2021, followed by a large decline in 2021 to 2022 and 2022 to 2023.

The second largest excise duties gap is the tobacco duty gap, which has fallen from 21.7% in 2005 to 2006 to 13.3% in 2011 to 2012. The tobacco tax gap has fluctuated since and was 13.8% in 2023 to 2024.

The hydrocarbon oils duty gap is the lowest amongst the excise duties gap components, falling from 2.8% in 2005 to 2006 to 0.2% in 2023 to 2024. The estimate for the hydrocarbon oils duty gap has been relatively low at below 1.0% since 2011 to 2012.

The estimate for the spirits duty gap, whilst showing some year-on-year volatility, has generally been declining from 6.4% in 2005 to 2006 to 1.4% in 2023 to 2024. The most recent peak in the spirits duty gap was 10.6% in 2013 to 2014. The estimate has been projected from 2019 to 2020.

The estimate for the other excise duties gap has fluctuated over time and has increased from 8.3% in 2005 to 2006 to 9.5% in 2023 to 2024. There was a peak in the other excise duties gap of 11.9% in 2013 to 2014.

Figure 3.2 excise duties gap as a percentage of theoretical liabilities by component

Notes for Figure 3.2:

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

Beer

Main findings

The beer duty gap is estimated using both an established top-down and bottom-up methodology which generate upper and lower bound estimates. The implied central estimate is an average of these estimates and is intended to be an indicator of the long-term trend.

Figure 3.3 shows the beer duty gap time-series in absolute terms and as a percentage of beer duty theoretical liabilities.

The beer duty gap estimate as a proportion of total theoretical beer duty liability gradually increased from 9.1% in 2005 to 2006 reaching a high of 19.2% in 2020 to 2021, followed by a decline to 9.0% in 2022 to 2023 and increasing to 16.0% in 2023 to 2024.

Figure 3.3: Beer duty gap by value and as a percentage of theoretical liability, 2007 to 2008 up to 2023 to 2024

Notes for Figure 3.3:

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

Figure 3.4 shows the beer duty gap, liability, and the theoretical liability, which is the sum of the duty gap and liability, since 2019 to 2020.

The beer duty gap has varied between £0.4 and £0.7 billion in the last 5 years. Beer duty liability declined to £3.1 billion in 2020 to 2021, followed by an increase to £3.6 billion in 2023 to 2024. Total theoretical beer liability has marginally increased over the last 5 years from £4.1 billion in 2019 to 2020 to £4.3 billion in 2023 to 2024.

Figure 3.4: Beer duty gap, liability and theoretical liability, since 2019 to 2020 (£ billion)

Year	Net duty gap	Duty liability	Total theoretical duty liability
2019-20	0.7	3.4	4.1
2020-21	0.7	3.1	3.8
2021-22	0.5	3.7	4.2
2022-23	0.4	3.7	4.0
2023-24	0.7	3.6	4.3

Notes for Figure 3.4:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Additional to the beer duty gap is the beer VAT gap. The VAT gap arising from undeclared beer is captured within the overall VAT gap covered in chapter 2. Figure 3.5 shows the VAT gap arising from undeclared beer duty since 2019 to 2020.

The beer VAT gap has been broadly stable between £0.2 billion and £0.4 billion in the last 5 years.

Figure 3.5: VAT gap arising from undeclared beer since 2019 to 2020 (£ billion)

Year	VAT gap
2019-20	0.3
2020-21	0.4
2021-22	0.3
2022-23	0.2
2023-24	0.3

Notes for Figure 3.5:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures are included in the VAT gap estimate.

Revisions

Figure 3.6 shows the revisions to the beer duty gap since the publication of the ‘Measuring tax gaps 2024 edition’.

There are small revisions due to updated data on on-license and off-license prices. Beer price data is supplied by the Office for National Statistics and is used to convert the household expenditure figures to market size.

Figure 3.6: Revisions to beer duty gap since the ‘Measuring tax gaps 2024 edition’

Notes for Figure 3.6:

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

2. MTG stands for ‘Measuring tax gaps’.

Spirits

Main findings

Figure 3.7 shows the spirits duty gap time-series in absolute terms and as a percentage of spirits duty theoretical liability.

There is high year-on-year volatility in the estimated spirits duty gap. The spirits duty gap estimate as a proportion of theoretical spirits duty liabilities has decreased from 6.4% in 2005 to 2006 to 1.4% in 2023 to 2024. The spirits duty gap peaked at 10.6% in 2013 to 2014 after which it has followed a steady downward trend.

The spirits duty gap estimate is projected from 2019 to 2020 based on assuming constant illicit market percentage. This is due to a lack of reliable data on which to base the estimate in these years.

Figure 3.7 Spirits duty gap by value and as a percentage of theoretical duty liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.7:

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

Figure 3.8 shows the spirits duty gap, duty liability, and the theoretical duty liability, which is the sum of the duty gap and duty liability, since 2019 to 2020.

The spirits duty gap has decreased from £70 million to £60 million over the last 5 years. Total theoretical spirits liabilities have increased from £3.9 billion to £4.2 billion.

Figure 3.8: Spirits duty gap, liability and theoretical liability, since 2019 to 2020 (£ million)

Year	Net duty gap	Duty liability	Total theoretical duty liability
2019-20	70	3,800	3,900
2020-21	70	4,100	4,200
2021-22	60	4,400	4,500
2022-23	60	4,100	4,200
2023-24	60	4,100	4,200

Notes for Figure 3.8:

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

2. Figures for the net tax gap are rounded to the nearest £10 million while the liability is rounded to the nearest £100 million.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Additional to the spirits duty gap is the spirits VAT gap. The VAT gap arising from undeclared spirits is captured within the overall VAT gap is covered in chapter 2.

Figure 3.9 shows the VAT gap arising from undeclared spirits since 2019 to 2020.

The spirits VAT gap has been broadly stable between £30 million and £40 million over the last 5 years.

Figure 3.9: VAT gap arising from undeclared spirits, since 2019 to 2020 (£ million)

Year	VAT gap
2019-20	40
2020-21	30
2021-22	40
2022-23	40
2023-24	40

Notes for Figure 3.9:

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

2. Figures are rounded to the nearest £10 million.

3. Figures are included in the VAT gap estimate.

Revisions

Figure 3.10 shows the revisions to the spirits duty gap since the publication of the ‘Measuring tax gaps 2024 edition’.

There are very small revisions to recent years due to updated data on spirits on-license and off-license prices. Spirits price data is supplied by the Office for National Statistics and is used to convert the household expenditure figures to spirits market size figures.

Figure 3.10: Revisions to spirits duty gap since the ‘Measuring tax gaps 2024 edition’

Notes for Figure 3.10:

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

2. MTG stands for ‘Measuring tax gaps’.

Tobacco

Main findings

The tobacco duty gap is calculated by summing the duty gaps for cigarettes and hand-rolling tobacco.

Both the cigarettes and hand-rolling tobacco duty gaps are each estimated using an established top-down methodology to estimate upper and lower duty gaps estimates, which are then averaged to obtain a central estimate for each.

Figure 3.11 shows the tobacco duty gap time-series in absolute terms and as a percentage of theoretical tobacco duty liability.

There has been a reduction in the tobacco duty gap estimate as a proportion of total theoretical tobacco duty liabilities, from 21.7% in 2005 to 2006 to 13.8% in 2023 to 2024. Between 2005 to 2006 and 2014 to 2015, the tobacco duty gap declined, reaching a low of 11.2% in 2014 to 2015. Since 2014 to 2015 the tobacco duty gap series has broadly remained stable.

Both the cigarette and hand-rolling tobacco duty gap estimates from 2020 to 2021 to 2022 to 2023 are imputed based on the 2019 to 2020 and 2023 to 2024 estimate of the illicit market. This is due to the removal of tobacco consumption questions from the Office for National Statistics’ Opinion and Lifestyle Survey from 2020 to 2021 to 2022 to 2023.

Figure 3.11: Tobacco duty gap by value and as a percentage of theoretical duty liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.11:

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

Figure 3.12 shows the tobacco duty gap, duty liability, and the theoretical tobacco duty liability, which is the sum of the duty gap and duty liability, since 2019 to 2020.

The tobacco duty gap has decreased from £1.6 billion to £1.4 billion in the last 5 years. The tobacco duty liability increased from £8.8 billion in 2019 to 2020 to £10.3 billion in 2021 to 2022, followed by decrease to £8.8 billion in 2023 to 2024. The total theoretical tobacco liability increased from £10.4 billion in 2019 to 2020 to £12.0 billion in 2021 to 2022, followed by a decrease to £10.2 billion in 2023 to 2024.

Figure 3.12: Tobacco duty gap, tax liability and theoretical tax liability (£ billion), since 2019 to 2020

Year	Net duty gap	Duty liability	Total theoretical duty liability
2019-20	1.6	8.8	10.4
2020-21	1.7	10.0	11.7
2021-22	1.7	10.3	12.0
2022-23	1.6	10.0	11.6
2023-24	1.4	8.8	10.2

Notes for Figure 3.12:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Additional to the tobacco duty gap is the tobacco VAT gap. The VAT gap arising from undeclared tobacco duty is captured within the overall VAT gap covered in chapter 2.

Figure 3.13 shows the VAT gap arising from undeclared tobacco since 2019 to 2020.

The tobacco VAT gap has been broadly stable between £0.4 billion and £0.5 billion in the last 5 years.

Figure 3.13: VAT gap arising from undeclared tobacco (£ billion), since 2019 to 2020

Year	VAT gap
2019-20	0.5
2020-21	0.5
2021-22	0.5
2022-23	0.4
2023-24	0.4

Notes for Figure 3.13:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures are included in the VAT gap estimate.

Figure 3.14 shows the time-series for the tobacco duty gap and its 2 components as a percentage of theoretical duty liability.

The trend in the tobacco gap is largely driven by the trend in the cigarette duty gap, which makes up most of the tobacco consumption and tax receipts. The hand-rolling tobacco duty gap has decreased from 65.3% in 2005 to 2006 to 22.9% in 2023 to 2024 and is higher than the cigarettes duty gap over the time-series.

The tobacco gap is imputed from 2020 to 2021 until 2022 to 2023 based on the illicit market percentage in 2019 to 2020 and 2023 to 2024. This is due to a pause in data collection by the Office for National Statistics on tobacco consumption during these years.

Figure 3.14: Tobacco duty gap as a percentage of total theoretical duty liability by component, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.14:

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

2. HRT stands for ‘Hand-rolling tobacco’.

Revisions

Figure 3.15 shows the revisions to the tobacco duty gap since the publication of the ‘Measuring tax gaps 2024 edition’.

The estimate of the tobacco duty gap is revised between 2020 to 2021 and 2022 to 2023 as data collection was paused for these years during COVID-19 and has now resumed. The full series has revisions due to an improved methodology imputing missing tobacco consumption data with the last known value.

Figure 3.15: Revisions to tobacco duty gap since the ‘Measuring tax gaps 2024 edition’

Notes for Figure 3.15:

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

2. MTG stands for ‘Measuring tax gaps’.

Cigarettes

Main findings

Figure 3.16 shows the cigarettes duty gap time-series in absolute terms and as a percentage of theoretical cigarettes duty liability.

There has been an overall reduction in the cigarettes duty gap estimate as a proportion of theoretical cigarettes duty liability, from 16.9% in 2005 to 2006 to 10.5% in 2023 to 2024. Between 2005 to 2006 and 2014 to 2015, the tobacco duty gap declined, reaching a low of 6.4% in 2014 to 2015, before increasing to 15.4% in 2016 to 2017 and declining to 10.5% in 2023 to 2024.

Figure 3.16: Cigarettes duty gap by value and as a percentage of theoretical duty liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.16:

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

Figure 3.17 shows the cigarettes duty gap, duty liability, and the theoretical duty liability, which is the sum of the duty gap and duty liability, since 2019 to 2020.

The cigarettes duty gap has been broadly stable between £0.7 billion and £0.8 billion in the last 5 years. The cigarettes duty liability has increased from £7.2 billion in 2019 to 2020 to £8.0 billion in 2021 to 2022, followed by a decrease to £6.7 billion in 2023 to 2024. The cigarettes total theoretical liability increased from £7.9 billion in 2019 to 2020 to £8.8 billion in 2021 to 2022, followed by a decrease to £7.5billion in 2023 to 2024.

Figure 3.17: Cigarettes duty gap, tax liability and theoretical tax liability (£ billion), since 2019 to 2020

Year	Net duty gap	Duty liability	Total theoretical duty liability
2019-20	0.7	7.2	7.9
2020-21	0.7	7.6	8.3
2021-22	0.8	8.0	8.8
2022-23	0.8	7.6	8.4
2023-24	0.8	6.7	7.5

Notes for Figure 3.17:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Additional to the cigarettes duty gap is the cigarettes VAT gap. The VAT gap arising from undeclared cigarettes duty is captured within the overall VAT gap covered in chapter 2.

Figure 3.18 shows the VAT gap arising from undeclared cigarettes since 2019 to 2020.

The cigarettes VAT gap has remained constant at £0.2 billion.

Figure 3.18: VAT gap arising from undeclared cigarettes (£ billion), since 2019 to 2020

Year	VAT gap
2019-20	0.2
2020-21	0.2
2021-22	0.2
2022-23	0.2
2023-24	0.2

Notes for Figure 3.18:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures are included in the VAT gap estimate.

Revisions

Figure 3.19 shows the revisions to the cigarette duty gap since the publication of the ‘Measuring tax gaps 2024 edition’.

As noted above, the estimate of the cigarette duty gap is revised between 2020 to 2021 and 2022 to 2023 due to the resumption of data collection on tobacco consumption which was paused during COVID-19.

Figure 3.19: Revisions to cigarettes duty gap since the ‘Measuring tax gaps 2024 edition’

Notes for Figure 3.19:

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

2. MTG stands for ‘Measuring tax gaps’.

Hand-rolling tobacco (HRT)

Main findings

Figure 3.20 shows the hand-rolling tobacco duty gap time-series in absolute terms and as a percentage of theoretical hand-rolling tobacco duty liability.

There has been a reduction in the hand-rolling tobacco duty gap as a proportion of theoretical tobacco duty liability, from 65.3% in 2005 to 2006 to a low of 22.9% in 2023 to 2024.

Figure 3.20: Hand-rolling tobacco duty gap by value and as a percentage of theoretical duty liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.20:

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

Figure 3.21 shows the hand-rolling tobacco duty gap, duty liability and theoretical duty liability since 2019 to 2020.

The net hand-rolling tobacco duty gap has reduced from £0.9 billion in 2019 to 2020 to £0.6 billion in 2023 to 2024. The hand-rolling tobacco duty liability has increased from £1.6 billion to £2.1 billion. The total theoretical hand-rolling tobacco duty increased from £2.5 billion in 2019 to 2020 to £3.4 billion in 2020 to 2021, followed by a decrease to £2.7 billion in 2023 to 2024.

Figure 3.21: Hand-rolling tobacco duty gap, duty liability and theoretical duty liability (£ billion), since 2019 to 2020

Year	Net duty gap	Duty liability	Total theoretical duty liability
2019-20	0.9	1.6	2.5
2020-21	1.0	2.4	3.4
2021-22	0.9	2.3	3.2
2022-23	0.8	2.4	3.2
2023-24	0.6	2.1	2.7

Notes for Figure 3.21:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Additional to the hand-rolling tobacco duty gap is the hand-rolling tobacco VAT gap. The VAT gap arising from hand-rolling tobacco is captured within the overall VAT gap covered in chapter 2.

Figure 3.22 shows the VAT gap arising from undeclared hand-rolling tobacco since 2019 to 2020 .

The hand-rolling tobacco VAT gap has been broadly stable between £0.2 billion and £0.3 billion over the last 5 years.

Figure 3.22: VAT gap arising from undeclared hand-rolling tobacco (£ billion), since 2019 to 2020

Year	VAT gap
2019-20	0.3
2020-21	0.3
2021-22	0.3
2022-23	0.3
2023-24	0.2

Notes for Figure 3.22:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures are included in the VAT gap estimate.

Revisions

Figure 3.23 shows the revisions to the hand-rolling tobacco duty gap since the publication of the ‘Measuring tax gaps 2024 edition’.

As noted above, the estimate of the hand-rolling tobacco duty gap is revised between 2020 to 2021 and 2022 to 2023 due to the resumption of data collection on tobacco consumption which was paused during COVID-19.

Figure 3.23: Revisions to hand-rolling tobacco duty gap since the ‘Measuring tax gaps 2024 edition’

Notes for Figure 3.23:

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

2. MTG stands for ‘Measuring tax gaps’.

Hydrocarbon oils (fuel duty)

Main findings

The hydrocarbon oils duty gap is estimated using an established top-down methodology based on fuel consumption data between tax years 2005 to 2006 and 2015 to 2016, and an established bottom-up methodology based on random enquiry programme data for the use of illicit diesel from 2016 to 2017 onwards. Therefore, figures from 2016 to 2017 are not directly comparable to previous years.

The misuse of other fuels (for example, petrol) has been excluded on the basis that this is believed to be negligible, the scale of which is not currently quantifiable.

Other fuel duties do however form a part of theoretical hydrocarbon oils duty liability.

Figure 3.24 shows the hydrocarbon oils duty gap time-series in absolute terms and as a percentage of theoretical hydrocarbon oils duty liability.

There has been a reduction in the hydrocarbon oils duty gap from 2.8% in 2005 to 2006 to 0.2% in 2023 to 2024. There was a large year-on-year decline from 2.7% in 2009 to 2010 to 1.3% in 2010 to 2011 and 0.6% in 2011 to 2012. It has remained broadly stable, between 0.2% and 0.5%, since 2012 to 2013.

Figure 3.24: Hydrocarbon oils duty gap (£ million) by value and as a percentage of theoretical duty liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.24:

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

Figure 3.25 shows the hydrocarbon oils duty gap, duty liability, and the theoretical duty liability, which is the sum of the duty gap and duty liability, since 2019 to 2020.

The hydrocarbon oils duty gap has decreased from £150 million in 2019 to 2020 to £50 million in 2023 to 2024, whilst hydrocarbon oils duty liability has decreased from around £27.6 billion in 2019 to 2020 to £24.8 billion in 2023 to 2024. The total theoretical hydrocarbon oils duty liability decreased from around £27.7 billion in 2019 to 2020 to £24.9 billion in 2023 to 2024.

Figure 3.25: Hydrocarbon oils duty gap, tax liability and theoretical tax liability (£ million), since 2019 to 2020

Year	Net duty gap	Duty liability	Total theoretical duty liability
2019-20	150	27,600	27,700
2020-21	120	20,900	21,000
2021-22	140	25,900	26,100
2022-23	50	25,100	25,100
2023-24	50	24,800	24,900

Notes for Figure 3.25:

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

2. Figures for the net tax gap are rounded to the nearest £10 million while the liability is rounded to the nearest £100 million.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Additional to the hydrocarbon oils duty gap is the hydrocarbon oils VAT gap. The VAT gap arising from undeclared hydrocarbon oils duty is captured within the overall VAT gap covered in chapter 2.

Figure 3.26 shows the VAT gap arising from undeclared hydrocarbon oils since 2019 to 2020.

The VAT gap arising from undeclared hydrocarbon oils has decreased from £40 million in 2019 to 2020 to £10 million in 2023 to 2024.

Figure 3.26: VAT gap arising from undeclared hydrocarbon oils (£ million), since 2019 to 2020

Year	VAT gap
2019-20	40
2020-21	30
2021-22	40
2022-23	10
2023-24	10

Notes for Figure 3.26:

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

2. Figures are rounded to the nearest £10 million.

3. Figures are included in the VAT gap estimate.

Diesel

Main findings

The diesel duty gap is estimated using an established top-down methodology based on fuel consumption data between tax years 2005 to 2006 and 2015 to 2016, and an established bottom-up methodology based on random enquiry programme data for the use of illicit diesel from 2016 to 2017 onwards. Therefore, figures from 2016 to 2017 are not directly comparable to previous years.

Figure 3.27 shows the diesel duty gap time-series in absolute terms and as a percentage of theoretical diesel liabilities.

There has been a reduction in the diesel duty gap from 5.7% in 2005 to 2006 to 0.3% in 2023 to 2024. There was a large year-on-year decline from 5.1% in 2009 to 2010 to 2.4% in 2010 to 2011 and to 1.0% in 2011 to 2012. It has remained broadly stable, between 0.3% and 0.8%, since 2012 to 2013.

There has been a small increase in the diesel duty gap in 2016 to 2017 due to a step change from the top-down to bottom-up methodology. It is broadly stable at 0.8% of theoretical duty liability from 2016 to 2017 to 2021 to 2022, before reducing to 0.3% in 2022 to 2023 and remaining stable.

Figure 3.27: Diesel duty gap by value (£ million) and as a percentage of total theoretical duty liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.27:

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

Figure 3.28 shows the diesel duty gap, duty liability, and the theoretical duty liability, which is the sum of the duty gap and duty liability, since 2019 to 2020.

The net diesel duty gap has decreased from £150 million in 2019 to 2020 to £50 million in 2023 to 2024, whilst diesel duty liabilities have decreased from £17.3 billion in 2019 to 2020 to £13.6 billion in 2020 to 2021, followed by an increase to £15.4 billion in the latest year. The total theoretical diesel duty liability decreased from £17.4 billion in 2019 to 2020 to £13.7 billion in 2020 to 2021, followed by an increase to £15.5 billion in the latest year.

Figure 3.28: Diesel duty gap, tax liability and theoretical tax liability (£ million), since 2019 to 2020

Year	Net duty gap	Duty liability	Total theoretical duty liability
2019-20	150	17,300	17,400
2020-21	120	13,600	13,700
2021-22	140	16,100	16,300
2022-23	50	16,000	16,100
2023-24	50	15,400	15,500

Notes for Figure 3.28:

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

2. Figures for the net tax gap are rounded to the nearest £10 million while the liability is rounded to the nearest £100 million.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Additional to the diesel duty gap is the diesel VAT gap. The VAT gap arising from undeclared diesel is captured within the overall VAT gap covered in chapter 2.

Figure 3.29 shows the VAT gap arising from undeclared diesel since 2019 to 2020.

The VAT gap arising from undeclared diesel has decreased from £40 million in 2019 to 2020 to £10 million in 2023 to 2024.

Figure 3.29: VAT gap arising from undeclared diesel (£ million), since 2019 to 2020

Year	VAT gap
2019-20	40
2020-21	30
2021-22	40
2022-23	10
2023-24	10

Notes for Figure 3.29:

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

2. Figures are rounded to the nearest £10 million.

3. Figures are included in the VAT gap estimate.

Revisions

There are no revisions to the diesel duty gap since the publication of the ‘Measuring tax gaps 2024 edition’.

Other fuels

The duty gap in other fuels is assumed to be zero due to low demand from commercial sectors and the highly flammable nature of the products.

Other excise duties

Main findings

The other excise duties gap captures the duty gaps of excise duties that do not currently have standalone models in the ‘Measuring tax gaps’ publication; namely betting and gaming, cider and perry, spirits-based ready-to-drink beverages and wine duties gaps.

Limitations in data or methods available means it is difficult to estimate these components individually, which is why an aggregated estimate is produced under ‘other excise duties’.

The other excise duties gap is based on an illustrative method, whereby a proxy indicator for the scale of revenue losses across other excise duties has been produced by estimating the weighted average percentage of tax gaps for similar taxes each year and multiplying this by theoretical tax duty liabilities.

The average percentage revenue losses should not be considered estimates of the true percentage losses across betting and gaming, cider and perry, spirits-based ready-to-drink beverages and wine duties, as this is unknown. Many of these taxes are very different from one another in nature and are therefore subject to different rules. The true other excise duties gaps are therefore likely to vary across the duties.

Figure 3.30 shows the other excise duties gap time-series in absolute terms and as a percentage of other excise duties theoretical liabilities.

There has been an increase in the other excise duties gap between the tax years 2005 to 2006 and 2023 to 2024 from 8.3% to 9.5% of theoretical liabilities.

Figure 3.30: Other excise duties gap by value (£ billion) and as a percentage of theoretical duty liabilities, 2005 to 2006 up to 2023 to 2024

Notes for Figure 3.30:

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

Figure 3.31 shows the other excise duties gap, duty liability, and the total theoretical duty liability, which is the sum of the duty gap and duty liability, since 2019 to 2020.

The other excise duties gap has increased from £0.6 billion in 2019 to 2020 to £0.9 billion in 2023 to 2024, whilst other excise duties liability has increased from £7.6 billion to £8.2 billion over the last 5 years. The total theoretical other excise duties liability increased from £8.2 billion to £9.1 billion over the last 5 years.

Figure 3.31: Other excise duties gap, duties liabilities and total theoretical duties liabilities (£ billion), since 2019 to 2020

Year	Net duties gap	Duties liability	Total theoretical duties liability
2019-20	0.6	7.6	8.2
2020-21	0.7	7.7	8.5
2021-22	0.5	8.0	8.5
2022-23	0.4	7.9	8.3
2023-24	0.9	8.2	9.1

Notes for Figure 3.31:

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

2. Figures are rounded to the nearest £0.1 billion.

3. Figures may not sum due to rounding.

4. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.