The UK’s tax authority faces heavy criticism for failing to track how billionaires pay taxes. A new report reveals a shocking billionaire tax gap, raising concerns over lost revenue. Meanwhile, pressure mounts on the government to introduce a wealth tax.
Therefore, Parliament’s spending watchdog, the Public Accounts Committee (PAC), has blasted HM Revenue & Customs (HMRC). The committee found HMRC cannot confirm how much the ultra-rich pay or avoid in taxes. This lack of transparency risks damaging public trust in the system.
Furthermore, the report highlights significant missed opportunities to collect more revenue. It urges HMRC to act fast to close the billionaire tax gap. The findings come as Labour faces growing calls for wealth tax reforms.
Earlier this month, Labour reversed key welfare policies, costing over £6bn. Now, economists warn Chancellor Rachel Reeves may need new taxes to cover a £30bn shortfall. Despite reassurances to businesses, the government has not ruled out a wealth tax.
Former Labour leader Neil Kinnock recently pushed for a new levy on the rich. With borrowing costs high and economic growth weak, experts say closing the billionaire tax gap could help stabilize finances.
HMRC has increased tax collections from wealthy individuals, securing £5.2bn in 2023-24. However, the PAC suggests this either means tax avoidance has worsened or past estimates were too low.
The report criticizes HMRC for not using available data to track billionaires. While HMRC monitors those earning £200,000+ or holding £2m+ in assets, billionaires far exceed these thresholds. The committee urges HMRC to cross-check public records, like the Sunday Times Rich List, with its own data.
In 2025, the UK had 156 billionaires, including Jim Ratcliffe and the Reuben brothers. The Hinduja family topped the list with £35.3bn. Yet HMRC cannot confirm their tax contributions.
Labour MP Lloyd Hatton expressed frustration over HMRC’s lack of insight. He stressed that “a lot of money is being left on the table.”
HMRC says new funding will help tackle tax avoidance. The Treasury allocated £1.7bn to hire more compliance staff, aiming to recover £7.5bn yearly by 2030. A spokesperson vowed to ensure “everyone pays the tax they owe.”
As debates over wealth taxes intensify, fixing the billionaire tax gap remains critical. Without swift action, public trust in the tax system could erode further.
For more political updates, visit London Pulse News.
