Official Statistics

5. Tax gaps: Corporation Tax

Updated 19 June 2025

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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 鈥榲ery low鈥� to 鈥榲ery high鈥�. The small, mid-sized and large businesses Corporation Tax gaps all have 鈥榤edium鈥� uncertainty.

More information on the tax gap uncertainty assessment can be found in the 鈥楳ethodological annex鈥�.

Figure 5.1 shows the Corporation Tax gap time-series in absolute terms and as a percentage of theoretical Corporation Tax liability.

The tax gap for Corporation Tax is 15.8% of the theoretical Corporation Tax liability, or 拢18.6 billion in absolute terms, in the tax year 2023 to 2024.

The Corporation Tax gap declined from 11.4% in 2005 to 2006 to its lowest percentage of 6.4% in 2011 to 2012. Since 2011 to 2012 the Corporation Tax gap has increased to 15.8% in 2023 to 2024.

The components of the Corporation Tax gap are projected in line with Corporation Tax liabilities from 2022 to 2023 for small businesses, 2021 to 2022 for mid-sized businesses and 2022 to 2023 for large businesses.

Figure 5.1: Corporation Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 5.1:

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

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 gap the lowest.

The increase in the Corporation Tax gap from 10.1% in 2018 to 2019 to 17.6% in 2020 to 2021 is primarily due to increases in the small businesses tax gap, which increased from 22.3% to 40.4% in the same period.

Figure 5.2 Corporation Tax gap as a percentage of total theoretical tax liabilities

Notes for Figure 5.2:

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

  2. 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 2019 to 2020.

The net tax gap has increased from 拢9.4 billion in 2019 to 2020 to 拢18.6 billion in 2023 to 2024. In the same period Corporation Tax liability has increased from 拢56.1 billion to 拢98.8 billion. This results in 拢117.4 billion total theoretical liability in 2023 to 2024.

Figure 5.3: Corporation Tax gap, tax liability and theoretical tax liability, since 2019 to 2020 (拢 billion)

Year Net tax gap Liability Total theoretical tax liability
2019-20 9.4 56.1 65.5
2020-21 10.5 53.9 64.5
2021-22 14.2 66.5 80.7
2022-23 15.5 81.6 97.1
2023-24 18.6 98.8 117.4

Notes for Figure 5.3:

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

  2. Figures are rounded to the nearest 拢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鈥檚 compliance activity.

Figure 5.4 shows the Corporation Tax gap, and its components: gross tax gap, compliance yield and non-payment since 2019 to 2020. The Corporation Tax gap is calculated as the gross tax gap plus non-payment and minus compliance yield.

The gross tax gap has increased from 拢10.3 billion in 2019 to 2020 to 拢20.3 billion in 2023 to 2024. Compliance yield increased from 拢1.4 billion to 拢2.3 billion over the last 5 years. Non-payment has stayed between 拢0.5 billion and 拢0.6 billion between 2019 to 2020 and 2023 to 2024.

Figure 5.4: Components of the Corporation Tax gap, since 2019 to 2020 (拢 billion)

Year Gross tax gap Compliance yield Non-payment Net tax gap
2019-20 10.3 1.4 0.6 9.4
2020-21 11.3 1.3 0.6 10.5
2021-22 15.0 1.4 0.5 14.2
2022-23 16.8 1.8 0.6 15.5
2023-24 20.3 2.3 0.5 18.6

Notes for Figure 5.4:

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

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

  3. Figures may not sum due to rounding.

Revisions

Figure 5.5 shows the revisions to the Corporation Tax gap since the publication of the 鈥楳easuring tax gaps 2024 edition鈥�.

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. Small business for 2021 to 2022 are now based on REP data rather than being projected from 2020 to 2021.

For 鈥楳easuring tax gaps 2025 edition鈥� we have updated some assumptions used to estimate non-payment. More detail can be found in the 鈥楳ethodological annex鈥�.

Figure 5.5: Revisions to Corporation Tax gap since the 鈥楳easuring tax gaps 2024 edition鈥�

Notes for Figure 5.5:

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

  2. MTG stands for 鈥楳easuring tax gaps鈥�.

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 40.1% of the small businesses theoretical Corporation Tax liability, or 拢14.7 billion in absolute terms, in the 2023 to 2024 tax year.

The small businesses Corporation Tax gap followed a downward trend between 2005 to 2006 and 2011 to 2012, declining from 19.9% to its lowest percentage of 9.1%. Since 2011 to 2012 it has increased, reaching a high of 40.5% in 2022 to 2023. The estimates are projected in line with small businesses Corporation Tax liability from 2022 to 2023.

Figure 5.6: Small businesses Corporation Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 5.6:

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

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 2019 to 2020.

The net tax gap has increased from 拢7.2 billion in 2019 to 2020 to 拢14.7 billion in 2023 to 2024. In the same period small businesses Corporation Tax liability has increased from 拢15.4 billion to 拢22.0 billion. This results in 拢36.7 billion small businesses Corporation Tax total theoretical liability in 2023 to 2024.

The small businesses Corporation Tax gap is projected in line with liabilities from 2022 to 2023, 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 2019 to 2020 (拢 billion)

Year Net tax gap Liability Total theoretical tax liability
2019-20 7.2 15.4 22.6
2020-21 8.4 14.8 23.2
2021-22 11.6 17.1 28.8
2022-23 12.3 18.1 30.4
2023-24 14.7 22.0 36.7

Notes for Figure 5.7:

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

  2. Figures are rounded to the nearest 拢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鈥檚 compliance activity.

Figure 5.8 shows the small businesses Corporation Tax gap, and its components: gross tax gap, compliance yield and non-payment since 2019 to 2020. The small businesses Corporation Tax gap is calculated as the gross tax gap plus non-payment and minus compliance yield.

The small businesses Corporation Tax gross gap has increased from 拢7.0 billion in 2019 to 2020 to 拢14.6 billion in 2023 to 2024. Compliance yield has been broadly stable between 拢0.1 billion and 拢0.2 billion. Non-payment has been broadly stable between 拢0.3 billion and 拢0.4 billion.

Figure 5.8: Components of the small businesses Corporation Tax gap, since 2019 to 2020 (拢 billion)

Year Gross tax gap Compliance yield Non-payment Net tax gap
2019-20 7.0 0.2 0.3 7.2
2020-21 8.2 0.1 0.4 8.4
2021-22 11.4 0.1 0.3 11.6
2022-23 12.0 0.1 0.3 12.3
2023-24 14.6 0.2 0.3 14.7

Notes for Figure 5.8:

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

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

  3. 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 has increased to 53% in 2021 to 2022.

Around three quarters of those who submitted incorrect returns did so with an additional Corporation Tax liability of over 拢1,000, and around one quarter with an additional Corporation Tax liability of less than 拢1,000.

Figure 5.9: Proportion of small businesses with incorrect Corporation Tax returns where additional liability established

Notes for Figure 5.9:

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

  2. Figures are rounded to the nearest 1 percent.

  3. 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 鈥楳easuring tax gaps 2024 edition鈥�.聽

The small businesses Corporation Tax gaps for the 2018 to 2019 through to 2021 to 2022 years are revised upwards following the inclusion of REP data, identifying greater non-compliance than previously forecast.聽聽

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.聽

For 鈥楳easuring tax gaps 2025 edition鈥� we have updated some assumptions used to estimate non-payment. More detail can be found in the 鈥楳ethodological annex鈥�.

Figure 5.10 Revisions to small businesses Corporation Tax gap since the 鈥楳easuring tax gaps 2024 edition鈥�

Notes for Figure 5.10:

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

  2. MTG stands for 鈥楳easuring tax gaps鈥�.

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 6.0% of the mid-sized businesses theoretical Corporation Tax liability, or 拢1.5 billion in absolute terms, in the 2023 to 2024 tax year.

Prior to 2016 to 2017 the mid-sized businesses Corporation Tax gap was quite volatile but has since steadily reduced from 9.3% to a projected 6.0% in 2023 to 2024.

The estimates are projected in line with mid-sized businesses Corporation Tax liability from 2021 to 2022.

Figure 5.11: Mid-sized businesses Corporation Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2023 to 2024

Notes for Figure 5.11:

  1. 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 liability, which is the sum of the tax gap and tax liability, since 2019 to 2020.

The net tax gap has increased from 拢1.1 billion to a projected 拢1.5 billion over the last 5 years. Mid-sized businesses Corporation Tax liability has increased from 拢11.9 billion in 2019 to 2020 to 拢23.9 billion in 2023 to 2024. Total theoretical liability has increased from 拢13.0 billion to 拢25.5 billion.

Figure 5.12: Mid-sized businesses Corporation Tax gap, tax liability and theoretical tax liability, since 2019 to 2020 (拢 billion)

Year Net tax gap Liability Total theoretical tax liability
2019-20 1.1 11.9 13.0
2020-21 1.0 13.6 14.6
2021-22 1.2 18.4 19.6
2022-23 1.3 19.6 20.9
2023-24 1.5 23.9 25.5

Notes for Figure 5.12:

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

  2. Figures are rounded to the nearest 拢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鈥檚 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 2019 to 2020. The mid-sized businesses Corporation Tax gap is calculated as the gross tax gap plus non-payment and minus compliance yield.

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 拢1.0 billion in 2019 to 2020 to a projected 拢1.5 billion in 2023 to 2024. Compliance yield has been broadly stable between 拢0.1 billion and 拢0.2 billion over the last 5 years. Non-payment has remained stable around 拢0.2 billion over the last 5 years.

Figure 5.13: Components of the mid-sized businesses Corporation Tax gap, since 2019 to 2020 (拢 billion)

Year Gross tax gap Compliance yield Non-payment Net tax gap
2019-20 1.0 0.1 0.2 1.1
2020-21 0.9 0.1 0.2 1.0
2021-22 1.2 0.1 0.2 1.2
2022-23 1.2 0.1 0.2 1.3
2023-24 1.5 0.2 0.2 1.5

Notes for Figure 5.13:

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

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

  3. 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 鈥楳easuring tax gaps 2024 edition鈥�.

For 鈥楳easuring tax gaps 2025 edition鈥� there has been no changes to the methodology. 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. There have been revisions in the mid-sized businesses Corporation Tax liability compared to previous publications. These factors have caused minor revisions from 2014 to 2015 onwards.

For 鈥楳easuring tax gaps 2025 edition鈥� we have updated some assumptions used to estimate non-payment. More detail can be found in the Methodological Annex.

Figure 5.14: Revisions to mid-sized businesses Corporation Tax gap since 鈥楳easuring tax gaps 2024 edition鈥�

Notes for Figure 5.14:

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

  2. MTG stands for 鈥楳easuring tax gaps鈥�.

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 4.2% of the large businesses theoretical Corporation Tax liability, or 拢2.3 billion in absolute terms, in the 2023 to 2024 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 4.2% in 2023 to 2024.

These tax gap estimates are projected in line with large businesses Corporation Tax liability from 2022 to 2023.

Figure 5.15: Large businesses Corporation Tax gap by value and as a percentage of theoretical tax liabilities, 2005 to 2006 up to 2023 to 2024

Notes for Figure 5.15:

  1. 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 liability, which is the sum of the tax gap and tax liability, since 2019 to 2020.

Large businesses Corporation Tax liability has almost doubled from 拢28.8 billion in 2019 to 2020 to 拢52.8 billion in 2023 to 2024. The net tax gap has increased from 拢1.1 billion to 拢2.3 billion over the last 5 years.

Figure 5.16: Large businesses Corporation Tax gap, tax liability and theoretical tax liability, since 2019 to 2020 (拢 billion)

Year Net tax gap Liability Total theoretical tax liability
2019-20 1.1 28.8 29.9
2020-21 1.1 25.5 26.7
2021-22 1.4 31.0 32.4
2022-23 1.9 43.9 45.8
2023-24 2.3 52.8 55.1

Notes for Figure 5.16:

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

  2. Figures are rounded to the nearest 拢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鈥檚 compliance activity.

Figure 5.17 shows the large businesses Corporation Tax gap, and its components: gross tax gap, compliance yield and non-payment since 2019 to 2020. The large businesses Corporation Tax gap is calculated as the gross tax gap plus non-payment and minus compliance yield.

The gross tax gap and compliance yield are both projected in line with large businesses Corporation Tax liability from 2022 to 2023.

The gross tax gap increased from 拢2.2 billion in 2019 to 2020 to a projected 拢4.2 billion in 2023 to 2024. Compliance yield increased from 拢1.2 billion in 2019 to 2020 to a projected 拢2.0 billion in 2023 to 2024. Non-payment has remained stable at 拢0.1 billion over the 5 years.

The net tax gap increased from 拢1.1 billion in 2019 to 2020 to a projected 拢2.3 billion in 2023 to 2024.

Figure 5.17: Components of the large businesses Corporation Tax gap, since 2019 to 2020 (拢 billion)

Year Gross tax gap Compliance yield Non-payment Net tax gap
2019-20 2.2 1.2 0.1 1.1
2020-21 2.2 1.1 0.1 1.1
2021-22 2.5 1.1 0.1 1.4
2022-23 3.5 1.6 0.1 1.9
2023-24 4.2 2.0 0.1 2.3

Notes for Figure 5.17:

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

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

  3. 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 鈥楳easuring tax gaps 2024 edition鈥�.

As compliance cases can take many years to close, the compliance yield of open cases is forecasted. Estimates are revised between publications due to differences between forecast and actual compliance yield.

For 鈥楳easuring tax gaps 2025 edition鈥� the methodology for forecasting compliance yield for open cases has been improved. For any open cases that are expected to close in the next 6 months or currently going through litigation we have used caseworker assessment to forecast the compliance yield. For other open cases the existing methodology remains.

This has resulted in revisions to the tax gap as the forecasted compliance yield is higher than with the previous methodology. This review has also resulted in the projection being shortened from 5 years to 2 years. Further detail can be found in the Methodological Annex.

For 鈥楳easuring tax gaps 2025 edition鈥� we have updated some assumptions used to estimate non-payment. More detail can be found in the 鈥楳ethodological annex鈥�.

Figure 5.18: Revisions to large businesses Corporation Tax gap since the 鈥楳easuring tax gaps 2024 edition鈥�

Notes for Figure 5.18:

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

  2. MTG stands for 鈥楳easuring tax gaps鈥�.

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