In this edition’s eNews, we look at the latest data from HMRC on the tax gap, tax guidance for Gen Zs, a plea on the cost of Brexit to business, and we look at HMRC’s payment reminder to self assessment taxpayers. There is also the government’s latest drive to reconnect young savers with Child Trust Funds and a research on the best methods to drive down youth unemployment to update you on.
- Tax gap up to more than £59 billion
- Gen Zs wish they had learnt basics about tax
- Brexit burden must be cut, says BCC
- Taxpayers urged to get ahead of July self assessment payment deadline
- Government steps up drive to reconnect young people with £1.6 billion in unclaimed savings
- Targeted subsidies are needed for firms to tackle Britain’s NEETs crisis
Tax gap up to more than £59 billion
The tax gap rose to a record high of £59.2 billion in cash terms for 2024/25, according to the latest data from HMRC.
The tax gap is the difference between what UK tax is expected to be paid and was actually paid.
The gap was 6.4% for the 2024/25 tax year as the tax authority collected £865.2 billion, representing 93.6% of all tax due.
HMRC estimates the tax gap using the most up to date information but figures are often revised as more data becomes available.
The percentage tax gap has fallen from 7.5% since measurement began in 2005/06, although there has been some fluctuation over that period.
HMRC said the estimates reflect the changing world in which it operates, where it is becoming more difficult to tackle non-compliance through traditional approaches alone.
Ellen Milner, Director of Public Policy at the Chartered Institute of Taxation (CIOT), said:
‘Despite the efforts of successive governments, the tax gap is proving stubbornly hard to keep down. The government’s ambitious target of a £10 billion reduction in the tax gap by 2029/30 feels very optimistic.
‘The high level of uncertainty around these figures raises questions as to how much HMRC can rely on the data in its decision making and as justification for taking particular courses of policy and compliance action, especially as year-on-year comparisons become more difficult.’
Internet link: HMRC press release CIOT website
Gen Zs wish they had learnt basics about tax
Four in ten of Generation Z say they wish they had learnt the basics about tax when they were younger, according to data from HMRC.
The tax authority is now encouraging those looking for work this summer to download the HMRC app to find the answers they need.
It says that as exams are finishing and young people are starting their summer job search, the HMRC app can help them understand their tax affairs and money matters.
Last year, an average of 3.4 million 18–24-year-olds worked during their summer break.
HMRC says that young jobseekers have access to all the job-related details they need in the app to simplify and speed up the process when starting a new seasonal job. This includes their National Insurance number, tax code, employment history and Pay As You Earn (PAYE) details.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said:
‘Downloading the HMRC app gives young people an advantage in understanding their tax affairs with instant access to information that can help demystify money matters.
‘Young people looking for their first job may not even be aware of what tax information they need. Having the HMRC app to hand will make it a lot easier.’
Internet link: HMRC press release
Brexit burden must be cut, says BCC
The UK government must set out a clear plan to ease the burdens that Brexit has placed on business, says the British Chambers of Commerce (BCC).
Over half of UK exporters think the current trade deal with the EU is making it harder to export and the need for change is urgent, according to BCC research.
There is also increasing concern among UK firms involved in European supply chains about the EU’s Made in Europe agenda.
Other key issues for business that still need to be addressed include customs red tape, VAT complexity, business mobility, mutual recognition of professional qualifications, and increased cooperation on defence.
William Bain, Head of Trade Policy at the BCC, said:
‘Businesses have been put through the wringer since Brexit, as the costs and complexity of trading with the EU have soared.
‘There is insufficient recognition and debate over the damaging effect on trade and growth this has caused. The Office for Budget Responsibility puts the long term hit to the UK’s economic growth at 4%.
‘Businesses have become increasingly frustrated because UK-EU relations don’t have to be this way. There are many steps that can be taken to simplify trade and benefit both our economies.’
Internet link: BCC website
Taxpayers urged to get ahead of July self assessment payment deadline
HMRC is reminding millions of self assessment taxpayers to prepare for the 2025 to 2026 tax year second payments on account 31 July deadline.
The tax authority says that taxpayers can set up monthly or weekly payment plans and any payments already made via these plans will count towards their next self assessment tax bill.
Payments can be done via the HMRC app, with nearly two million self assessment taxpayers doing so since its introduction in January 2022. It makes it easy for people to pay towards their tax bill, set payment reminders and track and view their payment history.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said:
‘We know managing a self assessment tax bill isn’t always straightforward and we are here to help. From paying instantly via the HMRC app to spreading the cost through a payment plan, there’s support available for every customer.
‘Search ‘Pay your self assessment tax bill’ on GOV.UK to choose the payment option that works for you.’
Internet link: HMRC press release
Government steps up drive to reconnect young people with £1.6 billion in unclaimed savings
The government is stepping up its efforts to reconnect young people with unclaimed savings in Child Trust Funds (CTFs).
Around 6.3 million Child Trust Fund accounts were opened for children born between 1 September 2002 and 2 January 2011.
More than 750,000 young adults still have unclaimed matured accounts, holding £2,200 on average and totalling over £1.6 billion.
CTFs were introduced to give every child a financial asset at adulthood. However, accounts can go unclaimed for a number of reasons, including difficulty locating them, people forgetting they have them, or a decision to leave the funds invested for the time being.
The government has set up a Child Trust Fund Taskforce, bringing together CTF providers to drive a coordinated effort to increase reunification of accounts.
Members of the Taskforce will include One Family, Coutts, Nationwide, HSBC UK, Pilling, The Coventry (Co-operative), Sheffield Mutual, Unity Mutual, Forester, Healthy Investments and The Share Foundation.
Rachel Blake, Economic Secretary to the Treasury, said:
‘Too many young people are missing out simply because they are not aware of where their CTF is or how to access it.
‘We are acting to fix that by bringing government and industry together – improving coordination and making it easier for people to find and claim what’s rightfully theirs.’
Internet link: HM Treasury website
Targeted subsidies are needed for firms to tackle Britain’s NEETs crisis
Targeted subsidies, rather than expensive tax breaks, are the most cost-effective way of supporting employers to get young people into work, according to Resolution Foundation analysis.
The think tanks warns that the number of young people not in employment, education or training (NEET) passed one million earlier this year. It says this is a crisis that risks scarring the living standards of a generation.
A range of solutions have been proposed to encourage firms to hire more young people. But a Resolution Foundation report shows that there is a vast gulf in their cost-effectiveness.
The report estimated that the Youth Jobs Grant, which offers firms £3,000 to hire an 18-24-year-old who has been on Universal Credit for six months or more, will create 2,800 additional jobs at a cost of around £36,700 each.
The Jobs Guarantee, which funds six months’ part-time employment for those out of work for at least 18 months, comes in at roughly £38,000 per additional job, making it three-and-a half times cheaper than scrapping employer National Insurance contributions (NICs).
Lindsay Judge, Research Director at the Resolution Foundation, said:
‘One million young people outside of work, education or training is a sobering milestone – the highest figure for 13 years, and a reality that risks lasting damage to the life chances of a generation. But reaching for employer tax cuts to resolve this doesn’t add up.’
Internet link: Resolution Foundation website
Internet link: GOV.UK
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