The UK’s increasingly complex tax system is driving up costs for both the government and businesses, according to a report by the National Audit Office (NAO), cited by The Guardian.
HMRC’s administrative expenses rose by 15% in real terms since 2019-20, reaching £4.3 billion in 2023-24, with further increases expected.
The number of income taxpayers grew by 4.5 million between 2020-21 and 2023-24, partly due to frozen tax thresholds pulling more people into higher tax brackets.
Small businesses, especially landlords, are expected to face additional challenges as they transition to digital tax records.
Businesses already spend an estimated £15.4 billion annually on tax compliance, though the NAO believes the real cost is higher.
The government plans to introduce tax simplifications in April.