In this week’s Enews, we look at the gap between the tax haul expected and that actually collected. There is also news on the government’s Industrial Strategy and HMRC’s latest guidance for employers to update you on.

• Tax gap estimated at 5.3%
• UK government launches Industrial Strategy
• Latest guidance for employers

The tax gap estimate was 5.3% for the 2023/24 tax year, according to the latest data from HMRC.

The tax gap is the difference between what tax is expected to be paid and actually paid.

HMRC collected £829.2 billion in the 2023/24 tax year representing 94.7% of all tax due, leaving £46.8 billion unpaid.

However, HMRC revised the figures upwards for 2022/23, from 4.8% (£39.8 billion) to 5.6% (£46.4 billion). It also warned that the latest figures may be revised as more data becomes available.

Some of the key findings from this year’s calculations show:

• Small businesses represent the largest proportion of the tax gap (60%).
• Corporation Tax accounts for 40% of the total tax gap.
• Failure to take reasonable care (31%), error (15%) and evasion (14%) are among the main behavioural reasons for the overall tax gap.

Ellen Milner, Director of Public Policy, said:

‘These figures show the stubbornness of the tax gap and how optimistic the government’s target of a £7.5 billion reduction by 2029/30 is.

‘While large businesses and wealthy individuals are often accused of not paying enough tax these figures suggest that their total share of the tax gap is not much more than a quarter of that of small businesses.

‘The small business figures reflect big upward revisions from HMRC a year ago as a result of a random enquiry programme carried out in 2020/21, which identified greater inaccuracy and non-compliance than previously forecast.’

Internet link: HMRC press release | CIOT website

The UK government is aiming to slash energy prices, unlock investment and upskill the workforce in its Industrial Strategy.

The government says the Industrial Strategy was developed in partnership with business and includes targeted support for the areas of the country and economy that have the greatest potential to grow.

It says it will slash electricity costs by up to 25% from 2027 for electricity-intensive manufacturers in growth sectors and foundational industries in their supply chain.

The government says it will unlock billions in finance for innovative business, especially for SMEs by increasing British Business Bank financial capacity to £25.6 billion.

Finally, it has pledged to upskill the nation with an extra £1.2 billion each year for skills by 2028/29.

Alex Veitch, Director of Policy at the British Chambers of Commerce (BCC), said:

‘Attracting and retaining people with the right skills is crucial for business, and a fundamental part of driving economic growth.

‘We are pleased the government has listened to our calls and put skills at the heart of the Industrial Strategy. The extra cash investment for training in key sectors, such as defence and engineering, has the potential to be a real springboard for growth.

‘Further action is needed on skills, including more flexibility in the Growth and Skills Levy and a commitment to Local Skills Improvement Plans across England, many of which are successfully led by Chambers.

‘This week’s Industrial Strategy must provide an ambitious long-term plan to drive forward investment and growth through businesses across the UK.’

Internet link: GOV.UK | BCC website

HMRC has published the latest issue of the Employer Bulletin. The June issue has information on various topics, including:

• PAYE Settlement Agreement calculations 2024 to 2025
• organised labour fraud — the supply of labour through Employment Intermediaries
• mandating the reporting of Benefits in Kind and expenses through payroll software
• Spotlight 68 — using prepaid debit cards for profit extraction to reduce profits and disguise income
• future changes to Statutory Sick Pay
• parents of teens reminded to go online to extend their Child Benefit claim.

Internet link: GOV.UK