As the UK’s tax authority, HM Revenue & Customs (HMRC) is never far from the headlines. In June 2025, a series of major developments have placed HMRC at the centre of national debate, from tackling tax avoidance to addressing cybercrime and modernising the tax system. Here’s a comprehensive look at the latest HMRC news and what it means for taxpayers and businesses across the UK.
Tax Gap Reaches £46.8 Billion: Government Steps Up Response
The most eye-catching figure in recent HMRC news is the estimated tax gap for the 2023 to 2024 tax year. The tax gap, which measures the difference between the tax that should be paid and what is actually collected, stands at 5.3%. In real terms, that’s a staggering £46.8 billion left unpaid, according to figures released on 19 June 2025.
While HMRC successfully collected £829.2 billion—representing 94.7% of all tax due—this gap remains a significant concern for the Treasury. The government has responded by announcing plans to raise an additional £7.5 billion through new measures aimed at closing this gap. The largest share of the shortfall comes from small business non-compliance, highlighting the ongoing challenge of ensuring all businesses meet their tax obligations.
James Murray MP, Exchequer Secretary to the Treasury, has outlined three core priorities for HMRC: closing the tax gap, improving customer services, and modernising the tax and customs system. He emphasised that every pound of uncollected tax increases the burden on honest taxpayers and deprives public services of essential funding.
New Measures to Tackle Tax Avoidance and Debt
The Spring Statement 2025 saw the government unveil a comprehensive package of measures targeting tax avoidance and maximising tax collection. These include recruiting an extra 500 compliance staff and consulting on reforms to the tax penalty regime. The aim is to make penalties fairer, simpler, and more effective, particularly where taxpayer behaviour influences the size of penalties.
One notable proposal is a whistleblowing scheme that rewards individuals who alert HMRC to serious non-compliance, especially in cases involving large corporations, wealthy individuals, and offshore schemes. There’s also a joint initiative with Companies House and the Insolvency Service to tackle “phoenixism”—where businesses use insolvency to evade tax and write off debts. Directors could soon be held personally liable for company taxes under these plans.
The government has also announced an expansion of HMRC’s counter-fraud capabilities, aiming to increase annual charging decisions from 500 to 600 by 2029/30. This is part of a broader effort to ensure tax advisers who facilitate non-compliance face stronger penalties and that promoters of tax avoidance schemes are more effectively disrupted, potentially including new criminal offences for failing to disclose notifiable arrangements.
Major Cyber Attack: £47 Million Lost to Fraud
In a development that has alarmed taxpayers and officials alike, HMRC recently confirmed it was the victim of a sophisticated cyber attack, resulting in a £47 million loss. Around 100,000 personal tax accounts were accessed without authorisation. HMRC is contacting affected taxpayers, assuring them they will not lose out financially, but those impacted will need to recreate their login details.
This incident underscores the growing challenges HMRC faces as it moves more services online. It also highlights the importance of robust cybersecurity measures to protect both public funds and personal data.
Interest Rates on Overdue Tax Cut
Following the Bank of England’s decision to lower its base rate from 4.5% to 4.25%, HMRC has reduced its interest rates on overdue tax by 0.25%. The main rate applied to overdue taxes is now 8.25%, while the rate for repayments from HMRC is 3.25%. These changes took effect from 19 May for quarterly payments and 28 May for others.
Making Tax Digital: The Next Phase
HMRC’s Making Tax Digital (MTD) programme continues to roll out, with the goal of reducing errors and improving compliance. MTD for VAT is expected to deliver over £4 billion in extra revenue by 2030 by reducing mistakes, while MTD for Income Tax is set to launch in April 2026. This initiative is forecast to generate an additional £1.95 billion by the end of the 2029/30 tax year.
The government has committed £1.7 billion over four years to fund 5,500 new compliance staff and 2,400 debt management staff. This investment aims to ensure more tax due is collected and supports the delivery of public services.
Updates and Corrections to Tax Data
HMRC is also making changes to how it reports tax receipts and National Insurance contributions, with new methodologies designed to provide a more accurate in-year view. These adjustments are expected to reduce reported annual receipts by less than 1% for the years 2022/23 to 2024/25. Revised figures will be published throughout 2025, with updates to VAT receipts, tax gaps, and annual statistics.
Guidance for Agency Workers and Charities
HMRC has issued new guidance for agency workers and contractors to help them avoid involvement in tax avoidance schemes. There’s also been clarification on the VAT treatment of fundraising events run by charities, following a recent tribunal decision. The ruling confirmed that for VAT relief, the primary purpose of an event must be fundraising and it must be advertised as such.
Conclusion
With the government under pressure to meet fiscal rules and political pledges, the drive to close the tax gap is set to intensify. The measures introduced in 2025 are among the toughest ever, but their success will depend on effective implementation and adequate resourcing for HMRC.
Taxpayers can expect ongoing changes to compliance requirements, increased scrutiny of tax advisers, and further digital transformation of HMRC’s services. As always, staying informed and up to date with the latest guidance is crucial for individuals and businesses alike.
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