HM Revenue & Customs (HMRC) has intensified its efforts to clamp down on wealthy individuals in the UK, resulting in an additional £5.2 billion collected in the last year alone.
This move forms part of a wider strategy to address tax non-compliance among high earners, who, despite representing a small portion of the population, contribute a significant share of the country’s personal tax revenue.
The enhanced enforcement targets households earning over £200,000 annually or those with assets exceeding £2 million, reflecting the government’s commitment to ensuring tax fairness. However, experts warn that this tougher stance may have implications for the UK’s attractiveness to affluent taxpayers.
Increased Tax Revenue Reflects Strengthened Enforcement but Reveals Compliance Challenges
According to HMRC, approximately 850,000 wealthy individuals accounted for £119 billion in personal taxes during the 2023-24 fiscal year, equating to a quarter of the nation’s total personal tax intake.
Since 2019-20, revenue from compliance activities targeting this group has more than doubled—from £2.2 billion to £5.2 billion—indicating a significant intensification in enforcement measures.
Despite this success, the number of penalties issued to wealthy taxpayers has sharply declined, from 2,153 in 2018-19 to 456 in 2023-24, with total fines dropping from £16.2 million to £5.8 million. This decline suggests that while investigations are yielding higher revenue, formal penalties are being applied less frequently.
Gareth Davies, head of the National Audit Office (NAO), noted that these figures may imply higher levels of tax non-compliance than previously estimated. He urged HMRC to improve transparency around tax collection efforts to maintain public confidence in the fairness of the system.
Balancing Enforcement With Economic Considerations for High Earners
The crackdown comes amid concerns that some wealthy individuals have relocated to countries with more favourable tax regimes.
Tim Stovold, from accountancy firm Moore Kingston Smith, highlighted that the UK’s tax take from this demographic could be reduced as a result. He emphasised the importance of a clear, balanced strategy that tackles non-compliance without deterring remaining wealthy taxpayers.
Further debate around tax policy was sparked by Nick Williams, a former senior economic adviser, who criticised recent government spending plans as “not credible,” suggesting that increased taxation is inevitable to support public finances.
HMRC reiterated its commitment to ensuring everyone pays the correct amount of tax under the law, regardless of wealth or status, and described the government’s approach as “the most ambitious ever package to close the tax gap,” aiming to raise an additional £7.5 billion annually by 2029-30.
The enhanced focus on compliance among high earners underlines ongoing efforts to secure tax revenues crucial for public services, while also navigating the delicate balance of maintaining the UK’s appeal as a place for wealth generation and investment.
