Official Statistics

6. Tax gaps: Other taxes

Updated 20 June 2024

Other taxes, levies and duties

Summary

The ‘other taxes’ gap is estimated using 6 components:

• Stamp Duty Land Tax gap, based on an experimental methodology using receipts, avoidance, and reliefs data

• Stamp Duty Reserve Tax gap, based on an experimental methodology using receipts data

• Inheritance Tax gap, based on an established statistical extreme value methodology which assumes that there is a small number of very high yielding compliance cases and many low yielding cases

• Petroleum Revenue Tax gap estimates between 2005 to 2006 and 2014 to 2015. This is not estimated from 2015 to 2016 as it was permanently zero rated from 1 January 2016

• Landfill Tax gap, based on an experimental methodology using receipts, compliance and unauthorised waste site data

• ‘Other taxes, levies and duties’ gap: this includes Aggregates Levy, Air Passenger Duty, Climate Change Levy, Customs Duty, Digital Services Tax, Insurance Premium Tax, Plastic Packaging Tax and Soft Drinks Industry Levy; the other taxes, levies and duties gap is based on an experimental methodology using a weighted average of the overall tax gap

To evaluate the uncertainty of our ‘other taxes’ gap, we assign an uncertainty rating for each component, ranging from ‘very low’ to ‘very high’. The estimate for the Landfill Tax gap and Inheritance Tax gap has ‘high’ uncertainty. The estimates for the Stamp Duty Land Tax gap has ‘medium’ uncertainty. The Stamp Duty Reserve Tax gap and other taxes levies and duties gap has ‘very high’ uncertainties.

Figure 6.1 shows the ‘other taxes’ gap time-series in absolute terms and relative to theoretical liabilities.

The ‘other taxes’ gap is estimated to be 3.6% of the ‘other taxes’ theoretical ‘other taxes’ liabilities, or £1.8 billion in absolute terms, in the 2022 to 2023 tax year.

There has been a gradual reduction in the ‘other taxes’ gap from 4.0% in 2005 to 2006 to 3.6% in 2022 to 2023, with some fluctuations in the intervening years.

Figure 6.1: ‘Other taxes’ gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2022 to 2023

Notes for Figure 6.1

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

Figure 6.2 shows the tax gaps for the ‘other taxes’ gap components: Stamp Duty Land Tax, Stamp Duty Reserve Tax, Inheritance Tax, Petroleum Revenue Tax, Landfill Tax and ‘other taxes, levies and duties’. Compared to the other ‘other taxes’ gap components, the estimate for Landfill Tax gap as a proportion of theoretical tax liabilities is the highest across the time-series since the 2014 to 2015 tax year. Stamp Duty Reserve Tax has consistently been the lowest estimate across the time-series.

The Stamp Duty Land Tax gap has reduced from 3.2% in 2005 to 2006 to 1.4% in 2022 to 2023, with a notable decline from 3.3% in 2011 to 2012 to 1.4% in 2013 to 2014.

The Stamp Duty Reserve Tax gap has been stable across the time-series at around 1.0%.

The Inheritance Tax gap has increased from 3.0% in 2005 to 2006 to 4.4% in 2022 to 2023.

The Petroleum Revenue Tax gap was stable around 2.0% until it was zero-rated in 2015 to 2016.

The Landfill Tax gap increased from 3.3% in 2005 to 2006 to a peak of 29.0% in 2018 to 2019. Since 2018 to 2019 it has reduced to 14.5% in 2022 to 2023.

The ‘other taxes, levies and duties’ gap has decreased from 7.4% in 2005 to 2006 to 4.8% in 2022 to 2023.

Figure 6.2: Other duty gap as a percentage of total theoretical tax liabilities

Notes for Figure 6.2

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

Stamp Duty Land Tax

Main findings

The Stamp Duty Land Tax gap is based on an experimental methodology using receipts, avoidance, and reliefs data.

To evaluate the uncertainty of our Stamp Duty Land Tax gap, we assign an uncertainty rating for each component, ranging from ‘very low’ to ‘very high’. The Stamp Duty Land Tax gap has ‘medium’ uncertainty.

Figure 6.3 shows the Stamp Duty Land Tax gap time-series in absolute terms and relative to theoretical Stamp Duty Land Tax liability.

The Stamp Duty Land Tax gap is 1.4% of the theoretical Stamp Duty Land Tax liability, or £225 million in absolute terms, in the 2022 to 2023 tax year.

The Stamp Duty Land Tax gap has reduced from 3.2% in 2005 to 2006 to 1.4% in 2022 to 2023.

The Stamp Duty Land Tax gap was stable around 3.3% between 2005 to 2006 and 2011 to 2012. The lower Stamp Duty Land Tax gap from 2012 to 2013 compared to previous years is mainly due to a change in methodology.

Figure 6.3: Stamp Duty Land Tax gap by value and as a percentage of theoretical tax liabilities, 2005 to 2006 up to 2022 to 2023

Notes for Figure 6.3

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

2. Figures are rounded to the nearest £25 million.

3. Percentage figures are rounded to the nearest 0.1%.

Figure 6.4 shows the Stamp Duty Land Tax gap, tax liability, and the theoretical liability, which is the sum of the tax gap and tax liability, since 2018 to 2019.

The Stamp Duty land Tax receipts has varied between £200 million and £250 million in the years between 2018 to 2019 and 2022 to 2023.

The Stamp Duty Land Tax liabilities declined from £11.9 billion in 2018 to 2019 to £8.7 billion in 2020 to 2021. Since 2020 to 2021 liabilities have increased from £8.7 billion to £15.4 billion in 2022 to 2023.

Figure 6.4: Stamp Duty Land Tax gap, tax liability and theoretical tax liability (£ million), since 2018 to 2019

Year	Net tax gap	Liability	Total theoretical tax liability
2018-19	200	11,900	12,200
2019-20	250	11,600	11,800
2020-21	200	8,700	8,900
2021-22	225	14,100	14,300
2022-23	225	15,400	15,600

Notes for Figure 6.4

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

2. Figures for the tax gap are rounded to the nearest £25 million while the liability is rounded to the nearest £100 million.
3. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Revisions

Figure 6.5 shows the revisions to the Stamp Duty Land Tax gap since the publication of the ‘Measuring tax gaps 2023 edition’.

Generally, the Stamp Duty Land Tax gap has small revisions over the last few year due to small updates to Stamp Duty Land Tax avoidance data.

Figure 6.5: Revisions to Stamp Duty Land Tax gap since the ‘Measuring tax gaps 2023 edition’

Notes for Figure 6.5

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

2. MTG stands for ‘Measuring tax gaps’.

Stamp Duty Reserve Tax

Main findings

The Stamp Duty Reserve Tax gap is based on an experimental methodology using receipts data.

To evaluate the uncertainty of our Stamp Duty Reserve Tax gap, we assign an uncertainty rating for each component, ranging from ‘very low’ to ‘very high’. Stamp Duty Reserve Tax gap has ‘very high’ uncertainty.

Figure 6.6 shows the Stamp Duty Reserve Tax gap time-series in absolute terms and relative to theoretical Stamp Duty Reserve Tax liability.

The Stamp Duty Reserve Tax gap is 1.0% of theoretical Stamp Duty Reserve Tax liability, or £40 million in absolute terms, in the 2022 to 2023 tax year.

The Stamp Duty Reserve Tax gap has been constant across the time-series between the tax years 2005 to 2006 and 2022 to 2023 at 1.0% of total theoretical liabilities.

Figure 6.6: Stamp Duty Reserve Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2022 to 2023

Notes for Figure 6.6

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

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

3. Percentage figures are rounded to the nearest 0.1%.

Figure 6.7 shows the Stamp Duty Reserve Tax gap, tax liability, and the theoretical liability, which is the sum of the tax gap and tax liability, since 2018 to 2019.

The net tax gap has remained stable at £40 million between the tax years 2018 to 2019 and 2022 to 2023 due to the assumption that the tax gap is approximately 1% of Stamp Duty Reserve Tax liability. Stamp Duty Reserve Tax liability increased from £3.6 billion in 2018 to 2019 to £3.8 billion in 2022 to 2023.

Figure 6.7: Stamp Duty Reserve Tax gap, tax liability and theoretical tax liability (£ million), since 2018 to 2019

Year	Net tax gap	Liability	Total theoretical tax liability
2018-19	40	3,600	3,700
2019-20	40	3,600	3,700
2020-21	40	3,700	3,700
2021-22	40	4,400	4,400
2022-23	40	3,800	3,800

Notes for Figure 6.7

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

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

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

Revisions

There are no revisions to the methodology for the Stamp Duty Reserve Tax gap since the publication of the ‘Measuring tax gaps 2023 edition’.

Inheritance Tax

Main findings

The Inheritance Tax gap is estimated using an established statistical method based on operational audit data, to estimate both tax payable at death and liabilities arising on transfers and charges on UK registered discretionary trusts. The extreme value methodology assumes that there is a small number of very high yielding compliance cases and a large number of low yielding cases.

To evaluate the uncertainty of the Inheritance Tax gap, we assign an uncertainty rating for each component, ranging from ‘very low’ to ‘very high’. The Inheritance Tax gap estimate has ‘high’ uncertainty.

Figure 6.8 shows the Inheritance Tax gap time-series in absolute terms and as a percentage of theoretical Inheritance Tax liability.

The Inheritance Tax gap is 4.4% of the theoretical Inheritance Tax liability, or £0.3 billion in absolute terms, in 2022 to 2023.

The Inheritance Tax gap has increased from 3.0% in 2005 to 2006 to 4.4% in 2022 to 2023. It reached a peak of 8.4% in 2013 to 2014.

Figure 6.8: Inheritance Tax gap by value and as a percentage of theoretical tax liabilities, 2005 to 2006 up to 2022 to 2023

Notes for Figure 6.8

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

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

3. Percentage figures are rounded to the nearest 0.1%.

Figure 6.9 shows the Inheritance Tax gap, tax liability, and the theoretical liability, which is the sum of the tax gap and tax liability, since 2018 to 2019.

The net Inheritance Tax gap has been broadly stable between £0.3 billion and £0.4 billion in the last 5 years. Inheritance Tax liability has increased from £5.4 billion to £7.1 billion in the last 5 years. The total theoretical liability has increased from £5.8 billion in 2018 to 2019 to £7.4 billion in 2022 to 2023.

Figure 6.9: Inheritance Tax gap, tax liability and theoretical tax liability (£ billion), since 2018 to 2019

Year	Net tax gap	Liability	Total theoretical tax liability
2018-19	0.4	5.4	5.8
2019-20	0.4	5.1	5.6
2020-21	0.3	5.3	5.7
2021-22	0.4	6.1	6.5
2022-23	0.3	7.1	7.4

Notes for Figure 6.9

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

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

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

Revisions

Figure 6.10 shows the revisions to the Inheritance Tax gap since the publication of the ‘Measuring tax gaps 2023 edition’.

Estimates have been updated based on the most recent compliance data. This has led to revisions across the time-series.

Figure 6.10: Revisions to Inheritance Tax gap since the ‘Measuring tax gaps 2023 edition’

Notes for Figure 6.10

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

2. MTG stands for ‘Measuring tax gaps’.

Petroleum Revenue Tax

Main findings

The Petroleum Revenue Tax gap is not calculated from 2015 to 2016 as it has been zero rated from 1 January 2016.

The full data series can be seen in the online tables

An illustrative indicator of the tax gap from Petroleum Revenue Tax for previous years was produced using the expert opinion of Petroleum Revenue Tax specialists. Given the narrowly defined base of the tax (limited to oil-producing fields developed before April 1993) and the small number of businesses involved, a range of between 1% and 3% of theoretical tax liabilities was used to calculate an illustrative tax gap. This produced an estimated tax gap of less than £10 million in tax year 2014 to 2015.

Landfill Tax

Main findings

The Landfill Tax gap is based on an experimental methodology using receipts, unauthorised waste sites and cash collected compliance data.

To evaluate the uncertainty of our Landfill Tax gap, we assign an uncertainty rating for each component, ranging from ‘very low’ to ‘very high’. The Landfill Tax gap has ‘high’ uncertainty.

Figure 6.11 shows the Landfill Tax gap time-series in absolute terms and relative to theoretical Landfill Tax liabilities.

The Landfill Tax gap is 14.5% of the theoretical Landfill Tax liability, or £100 million in absolute terms, in the 2022 to 2023 tax year.

There has been an increase in the Landfill Tax gap from 3.3% in 2005 to 2006 to 14.5% in 2022 to 2023.

There is a notable peak in the Landfill Tax gap in 2018 to 2019 due to the introduction of unauthorised waste sites into the scope of Landfill Tax legislation.

Figure 6.11: Landfill Tax gap by value and as a percentage of theoretical tax liability, 2005 to 2006 up to 2022 to 2023

Notes for Figure 6.11

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

2. Figures are rounded to the nearest £25 million. Percentage figures are rounded to the nearest 0.1%.

Figure 6.12 shows the Landfill Tax gap, tax liability, and the theoretical liability, which is the sum of the tax gap and tax liability, since 2018 to 2019.

The net Landfill Tax gap decreased from £275 million in 2018 to 2019 to £100 million in 2022 to 2023. Landfill Tax liabilities have been broadly stable between £600 million and £700 million in the last 5 years. The Total theoretical liability has decreased from £1.0 billion to £0.7 billion.

Figure 6.12: Landfill Tax gap, tax liability and theoretical tax liability (£ million), since 2018 to 2019

Year	Net tax gap	Liability	Total theoretical tax liability
2018-19	275	700	1,000
2019-20	200	600	800
2020-21	100	600	700
2021-22	125	700	800
2022-23	100	600	700

Notes for Figure 6.12

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

2. Figures for the tax gap are rounded to the nearest £25 million while the liability is rounded to the nearest £100 million.
3. Liability refers to the actual amount expected to be received by HMRC based on taxpayer declarations and HMRC’s compliance activity.

Revisions

Figure 6.13 shows the revisions to the Landfill Tax gap since the publication of the ‘Measuring tax gaps 2023 edition’.

The Landfill Tax gap time-series has small revisions in recent years due to updated unauthorised waste sites data from the Environment Agency.

There has also been an update to Landfill Tax compliance data in recent years.

Small corrections have also been made across the time-series following updates to data on diversion of waste away from landfill to incineration.

Figure 6.13: Revisions to Landfill Tax gap since the ‘Measuring tax gaps 2023 edition’

Notes for Figure 6.13

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

2. MTG stands for ‘Measuring tax gaps’.

Other taxes, levies and duties

Main findings

The ‘other taxes, levies and duties’ gap captures the duty gap of other taxes, levies and duties that do not currently have standalone models in the ‘Measuring tax gaps’ publication, namely Aggregates Levy, Air Passenger Duty, Climate Change Levy, Customs Duty, Digital Services Tax, Insurance Premium Tax, Plastic Packaging Tax and Soft Drinks Industry Levy.

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 taxes, levies and duties’.

The ‘other taxes, levies and duties’ gap is based on an experimental method, whereby a proxy indicator for the scale of revenue losses across ‘other taxes, levies and duties’ has been produced by estimating the weighted average percentage of the overall tax gap each year and multiplying this by receipts.

The average percentage revenue losses should not be considered estimates of the true percentage losses across Aggregates Levy, Air Passenger Duty, Climate Change Levy, Customs Duty, Digital Services Tax, Insurance Premium Tax, Plastic Packaging Tax and Soft Drinks Industry Levy, 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 tax gaps are therefore likely to vary across the taxes.

To evaluate the uncertainty of our ‘other taxes, levies and duties’ gap, we assign an uncertainty rating for each component, ranging from ‘very low’ to ‘very high’. The ‘other taxes, levies and duties’ gap has ‘very high’ uncertainty.

Figure 6.14 shows the ‘other taxes, levies and duties’ gap time-series in absolute terms and relative to ‘other taxes, levies and duties’ total theoretical liabilities.

The other taxes, levies and duties gap is 4.8% of the theoretical ‘other taxes, levies and duties’ liability, or £1.1 billion in absolute terms, in the 2022 to 2023 tax year.

There has been a reduction in the ‘other taxes, levies and duties’ gap from 7.4% in 2005 to 2006 to 4.8% in 2022 to 2023.

The ‘other taxes, levies and duties’ gap varies across the time-series due to sensitivities in the overall tax gap used as part of the weighted average in the methodology.

Figure 6.14: Other taxes, levies and duties gap by value and as a percentage of theoretical tax liabilities, 2005 to 2006 up to 2022 to 2023

Notes for Figure 6.14

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

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

3. Percentage figures are rounded to the nearest 0.1%.

4. Plastic Packaging Tax was introduced on 1 April 2022 and forms part of the ‘Other taxes, levies and duties’ estimates from 2022 to 2023.

Figure 6.15 shows the ‘other taxes, levies and duties’ gap, tax liability, and the theoretical liability, which is the sum of the tax gap and tax liability, since 2018 to 2019.

The net tax gap has increased from £0.8 billion in 2018 to 2019 to £1.1 billion in 2022 to 2023.

Figure 6.15: ‘Other taxes, levies and duties’ gap, tax liability and theoretical tax liability (£ billion), since 2018 to 2019

Year	Net tax gap	Liability	Total theoretical tax liability
2018-19	0.8	15.7	16.5
2019-20	0.9	16.1	17.0
2020-21	0.6	12.3	12.9
2021-22	0.8	15.5	16.3
2022-23	1.1	22.4	23.6

Notes for Figure 6.15

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

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

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

4. Plastic Packaging Tax was introduced on 1 April 2022 and forms part of the ‘Other taxes, levies and duties’ estimates from 2022 to 2023.

Revisions

Figure 6.16 shows the revisions to the ‘other taxes, levies and duties’ gap since the publication of the ‘Measuring tax gaps 2023 edition’.

The other taxes, levies and duties gap has small revisions across the time-series due to changes within the overall tax gap that form a part of the weighted average used within the methodology.

Figure 6.16: Revisions to other taxes, levies and duties gap since the ‘Measuring tax gaps 2023 edition’

Notes for Figure 6.16

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

2. MTG stands for ‘Measuring tax gaps’.

3. Plastic Packaging Tax was introduced in 1 April 2022 and forms part of the ‘Other taxes, levies and duties’ estimates from 2022 to 2023.