The UK tax system has become expensive and is increasingly difficult to manage, with the increase in administrative expenditures for both the government and companies, according to a report from the National Audit Bureau (NAO).
The spending control authority warned that the increasing complexity in the tax rules paid the costs of HMRC operation by 563 million pounds, at the real conditions since 2019-20, as it reached 4.3 billion pounds in 2023-24. Meanwhile, companies can spend 15.4 billion pounds annually on tax compliance, a number that NAO believes may be low.
Despite the continuous digital transformation of HMRC, the report highlights a decrease in the quality of service, as taxpayers and their representatives are struggling to move in the system. Modern concerns include waiting times for longer calls, as critics accuse HMRC of converting deliberate users online by making their phone services more difficult to access.
One of the main engines of the growing costs is an increase of 4.5 million in income taxpayers between 2020-21 and 2023-24, which reaches 36.2 million. It has been largely fed with financial withdrawal, as frozen income tax thresholds withdraw more low price owners to the basic price range (12,570 pounds) and push those approaching 50,270 pounds to a rate of 40 %.
In addition to the high employment and population growth, these changes have increased significantly from the number of taxpayers, adding pressure on the burden of HMRC administrative work. It is expected that there will be other-cubled costs of 875 million pounds-in the coming years due to the new tax base changes and the increase in anti-fraud measures.
Small companies facing an increasing burden
The report indicates that small companies, including owners, are likely to be among the most difficult successes because they are required to move to digital self -evaluation records. The government admitted the problem and announced plans to simplify taxes in the autumn budget, with more measures to be revealed in April.
Despite the results, a HMRC spokesman defended his efficiency, saying: “We only cost us half a penny to collect each pound of tax revenues, with NAO admitted that our compliance work provides good value for money.” The Tax Authority insisted that the modernization and digital investment remains a major priority to simplifying the system and reducing the bureaucracy of companies.
NAO HMRC urged to improve efficiency and reduce the administrative burden of individuals and companies, ensuring that the tax system is more flexible and easier to move.
Gareth Davis, President of NAO, stressed the need for a more modern and cost -effective approach: “Works and individuals deserve a modern, flexible and effective tax system to help them obtain taxes the first time. To get the most beneficial from the money that you spend on tax collection, must be Hmrc is better to understand how changes in the system affect the costs you bear in tax management, as well as the financial burden on individuals and companies.
With more tax changes on the horizon, companies and taxpayers will closely monitor both to see if the government is reaching its promise to simplify the system and reduce compliance costs.