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1. What is theÌýVATÌý²µ²¹±è?

°Õ³ó±ðÌýVATÌýgap is measured by comparing the netÌýVATÌýtotal theoretical liability (VTTL) with netÌýVATÌýreceipts. This compares the amount ofÌýVATÌýHMRCÌýexpects to receive and theÌýVATÌýHMRCÌýactually receives. °Õ³ó±ðÌýVATÌýgap is reported here both as a difference betweenÌýVTTLÌýand receipts (point estimate), and as a percentage ofÌýVTTL. °Õ³ó±ðÌýVATÌýgap methodology uses a ‘top-down’ approach.

2. Second estimate of theÌýVATÌýgap for tax year 2024 to 2025

The table below shows the headline figures used to produce the secondÌýVATÌýgap estimate for tax year 2024 to 2025.

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Tax year	NetÌýVATÌýtotal theoretical liability	HMRCÌýnetÌýVATÌýreceipts	NetÌýVATÌýreceipts related to netÌýVATÌýtotal theoretical liability in 2024 to 2025	VATÌýgap (point estimate)	VATÌýgap (per cent)
2024 to 2025	£182.6 billion	£170.9 billion	£170.7 billion	£11.9 billion	6.5

The amounts calculated are rounded to the nearest £0.1 billion and theÌýVATÌýgap as a percentage has been rounded to the nearest 0.1 per cent. NetÌýVTTLÌýand netÌýVATÌýreceipts are expressed net of payments and repayments. A portion of theÌýVTTLÌýestimate is projected rather than actual expenditure.

The second estimate of theÌýVATÌýgap for 2024 to 2025 at 6.5% (£11.9 billion) shows an increase in percentage terms compared with the estimate of theÌýVATÌýgap for 2023 to 2024 of 5% (£8.9 billion) published in ‘Measuring tax gaps 2025 edition’. The second estimate remains lower than the 2022 to 2023 estimate of 7.8% (£13.1 billion), in the same publication.

There has been an upward revision of 0.3 percentage points to the second estimate of theÌýVATÌýgap for 2024 to 2025 compared with the preliminary estimate (previously 6.2%). This represents a £0.5 billion upward revision to theÌýVATÌýgap in pound terms from the preliminary estimate (£11.4 billion).

Since the preliminary estimate, the latestÌýONSÌýBlue Book 2025 andÌýONSÌýConsumer Trends data Quarter 3 have been included.

As per the preliminary estimate, the 2024 to 2025 net receipts figure in theÌýVATÌýgap model includes adjustments to account for policies which affectÌýVATÌýpayments which are received in one year, and accrued in another. This adjustment toÌýVATÌýreceipts ensures when estimating theÌýVATÌýgap for 2024 to 2025 that only the netÌýVATÌýreceipts which related to the netÌýVATÌýtotal theoretical liability (netÌýVTTL) in 2024 to 2025 are included. This figure is shown in a separate column in table above, ‘NetÌýVATÌýreceipts related to netÌýVATÌýtotal theoretical liability in 2024 to 2025’.

3. Details ofÌýHMRC’sÌýVATÌýgap publications

HMRCÌýpublishes three estimates of theÌýVATÌýgap for the latest tax year each year: the first in the autumn, the second in the following spring, and the third as part ofÌýHMRC’s ‘Measuring tax gaps’ publication in the summer.

The preliminary estimate of theÌýVATÌýgap for 2024 to 2025 was published at Autumn Budget 2025 on 26 November 2025. It was based on a full year of household expenditure data in line withÌýONSÌýConsumer Trends data published on 30 September 2025 - which accounts for around 70% of theÌýVTTL. This data aligns with theÌýONSÌýNational Accounts Blue Book 2025, which was published on 31 October 2025. For the preliminary estimate publication,ÌýHMRCÌýused theÌýONSÌýNational Accounts Blue Book 2024 non-household data up to 2023 to 2024 and is forecast using the Office for Budget Responsibility (OBR) determinants. The Blue Book data accounts for the remaining 30% of theÌýVTTL, and comprises government, charities, businesses making non-business supplies or supplies exempt fromÌýVAT, and housing.

This is the second estimate of theÌýVATÌýgap for 2024 to 2025 and it includes the latestÌýONSÌýConsumer Trends data, which was published on 23 December 2025. It also includes the latestÌýONSÌýNational Accounts Blue Book 2025 non-household expenditure data but continues to forecast around 30% of the 2024 to 2025ÌýVTTLÌýin line with the latestÌýOBRÌýforecasting assumptions.

HMRCÌýwill publish aÌýVATÌýgap estimate for 2024 to 2025 along with an updated historical series as part of the ‘Measuring tax gaps 2026 edition’ publication in summer 2026. It is expected to include further updates, such asÌýONSÌýConsumer Trends data.

Due to timing, the ‘Measuring tax gaps 2026 edition’ publication will not include the Blue Book 2026 data, therefore 30% of the 2024 to 2025 estimate will remain forecasted until the publication of ‘Measuring tax gaps 2027 edition’.

For details on assumptions provided by theÌýOBR, go toÌý. For details on Blue Book data go toÌý. For details on the Consumer Trends data go toÌý

For details on the Measuring tax gaps publication, go toÌýMeasuring tax gaps.

4. Revisions policy

HMRC’s policy is to only publish a revised historicalÌýVATÌýgap series once a year, within the Measuring tax gaps publication, incorporating both new and revised data and methodological improvements together.

5. Methodology

Further information on the methodology used to estimate theÌýVATÌýgap can be found inÌý‘Measuring tax gaps 2025 edition - Methodological annex’, Chapter D

6. User engagement

HMRCÌýis committed to providing impartial quality statistics that meet our users’ needs. We encourage our users to engage with us so that we can improve our Official Statistics and identify gaps in the statistics that we produce.

If you have any comments or questions about these statistics then please contact the responsible statistician directly. Go toÌýStatistics atÌýHMRCÌýfor further information.

7. Publication info

Theme: the economy

Released: 3 March 2026

Next release: Summer 2026

© Crown copyright 2026

8. Contact

For statistical enquiries contact:

revenuemonitoring@hmrc.gov.uk

For media enquiries, contact theÌýHMRCÌýpress office (Business and Corporate desk): 03000 550 493