Capital Economy, Business and Finance
Raising taxes is expensive. The National Audit Office (NAO) found the cost of administering the UK’s tax system rose by 15 per cent in real terms – or £563 million – between 2019 and 2024.
Several factors are behind this. First, digitising HMRC systems and recruiting the high-skilled staff required to reduce errors and tackle fraud. Cost: £482 million in 2023-24.
Second, since 2022 the Treasury has repeatedly changed the UK’s tax policy. Cost: £875 million over “the next few years”.
Third, more people are paying tax. Population growth and frozen tax thresholds mean the number of people liable for income tax increased by 4.5 million between 2020-21 and 2023-24.
The amount raised per HMRC worker through compliance has also fallen, while customer service is described as “poor”. The NAO reports “some loss of trust” in HMRC.
