The estimated tax gap in the UK was 5.3% in 2023-24, meaning £46.8bn was unpaid in the year, according to new figures from HMRC.

But the gap was down from 5.6%, or £46.4bn in 2022-23.

The tax authorities collected £829.2bn during the year, representing 94.7% of all tax due.

HMRC said small businesses were responsible for the largest share of the gap. It said small business non-compliance increased to a 60% share, up from 48% five years ago.

Corporation Tax accounted for 40% of the total tax gap, it said.

The main behavioural reasons for the overall tax gap were failure to take reasonable care (31%), error (15%) and evasion (14%).

James Murray, exchequer secretary to the Treasury, said: ““Every pound of tax uncollected puts a greater burden on honest taxpayers and deprives our public services of vital funding.”

The government has announced plans to raise a further £7.5bn through its measures to close the tax gap.

In March the Treasury said it would consult on a range on new measures to crackdown on promoters of tax avoidance schemes as it seeks to boost tax revenue.

The proposals could include giving HMRC additional powers and stronger sanctions to enable it to “effectively disrupt” the business model promoters rely on, the Treasury said.

Rachael Griffin, tax and Financial Planning expert at Quilter, said the rise in the corporation tax gap is the “standout concern” in the new data. “That’s a red flag for policymakers, especially as economic uncertainty and global tax competition continue to put pressure on business revenues.”

She warned: “However, with frozen thresholds and lower allowances, for dividends and capital gains in particular, more people are being pulled into the tax system for the first time, often without realising it.

“That raises the risk of accidental non-compliance, especially where income is irregular or reporting requirements are poorly understood.”