UK Tax Complexity Costs Businesses £15.4bn Annually, Watchdog Warns

A report by the National Audit Office highlights rising administrative costs for businesses and HMRC, calling for urgent simplification measures.

The National Audit Office (NAO) estimates that businesses spend £15.4bn annually on compliance costs, including accountants, administrative staff, and software.
HM Revenue & Customs (HMRC) saw a 15% rise in its own operational costs from 2019-20 to 2023-24, totaling £4.3bn last year, partly due to tax system complexity and policy changes.
The number of taxpayers has grown by 4.5 million since 2020, driven by frozen tax thresholds, population growth, and increased employment.
Business groups and the NAO criticize HMRC's poor customer service and lack of understanding of the financial burden on taxpayers, calling for better efficiency and measurable targets to reduce administrative costs.
The government plans to announce tax simplification measures this spring, with a focus on easing the burden for small businesses.