A report by the National Audit Office highlights the increasing cost and complexity of the UK's tax system, with HMRC's administrative costs rising significantly. Since 2019, these costs have surged by £563 million, reaching £4.3 billion in 2023-24. Meanwhile, businesses face an estimated £15.4 billion in compliance costs. Service quality has deteriorated despite ongoing digital transformation efforts, with issues such as longer call waiting times. The increase in income tax payers and subsequent regulations add to the burden, particularly on small businesses as they transition to digital assessments.
The UK's tax system is becoming increasingly costly and difficult to manage, with administrative expenses soaring for both the government and businesses.
Growing complexity in tax rules has pushed HMRC's running costs up by £563 million in real terms since 2019-20, reaching £4.3 billion in 2023-24.
Businesses, meanwhile, are estimated to be spending £15.4 billion annually on tax compliance, a figure the NAO believes may be an understatement.
Small businesses are likely to be among the hardest hit as they are required to move to digital self-assessment records.
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