How Labour will crack down on tax dodgers to fund our schools and NHS

Rachel Reeves at a podium in front of a UK flag

Labour will target raising an extra £5 billion a year by tackling tax avoidance – and fund policies to bring down NHS waiting times and introducing free school breakfast clubs for every primary school pupil.

Labour’s Plan to Close the Tax Gap will relentlessly pursue the money that is owed, with a plan to make sure people pay the right tax in the first place, and that directly tackles tax avoidance and evasion. 

The plan would raise a net £700 million in 2025/26, rising to £5.1 billion a year by the end of the parliament. It outlines legal and regulatory changes that a future Labour government would consider introducing to tackle tax avoidance too, including requiring a wider range of tax schemes to be reported to HMRC under the disclosure of tax avoidance schemes regime.

Labour will also raise £2.6 billion over the course of the next Parliament – including £1 billion initially – by closing the loopholes in Rishi Sunak’s non-dom plan.

This money raised will pay for Labour’s plans to bring down NHS waiting lists and introduce breakfast clubs in every primary school.

How much unpaid tax is owed in the UK?

The gap between the amount of tax owed and what the government collects rose to a staggering £36 billion in 2021/22 – an increase of £5 billion from the year before.

The Conservative Government is not doing enough to close the tax gap.

The number of civil investigations opened into offshore, corporate and wealthy tax fraud opened by HM Revenue & Customs’ (HMRC) has fallen by more than half in five years.

The head of the National Audit Office has recently said that there is £6 billion a year that could be recovered through a concerted effort on tax avoidance. 

And under the Conservatives’ plans only £1 billion a year in outstanding tax debt will be recovered.

What will be funded with the money raised from tackling tax avoidance?

Labour will use some of the funding raised each year from these plans will go towards Labour’s commitments to tackle NHS waiting lists and extra dental appointments, and funding free school breakfast clubs for every primary school pupil.

This money will fund:

  • Providing two million more NHS operations, scans, and appointments a year on evenings and weekends 
  • Doubling the number of NHS scanners, buying AI-scanners which work 35% faster, to diagnose patients earlier 
  • Delivering 700,000 urgent dentistry appointments, recruiting more dentist to areas most in need, and introducing supervised toothbrushing for 3-5 year-olds 
  • Introducing free breakfast clubs in every primary school

Over the course of a parliament, the measures announced raise almost twice as much as our NHS and breakfast clubs spending plans. Together with the other revenue raisers we have already announced, this means every policy Labour will put forward in its manifesto will be fully funded in every year and comply with our fiscal rules.

How would Labour crack down on tax avoidance and close the tax gap?

Labour’s invest-to-save plan will see up to £855 million of additional funding will go to HMRC each year to boost tax income by:

  • Bolstering the number of compliance officers working out of the tax office by up to 5,000 to increase the number of investigations, tackle fraud and ensure tax owed is collected.
  • Investing in digitisation of the tax office to improve compliance rates and customer services, and free up resources to focus on more complex cases. 
  • Working with businesses, the tax profession and digital service providers to bring a new focus to HMRC’s modernisation, including greater use of AI – learning from industry and best practice overseas to make sure its scope is ambitious, whilst having new, achievable timescales for delivery.
  • The plan outlines legal and regulatory changes that a future Labour government would consider introducing to tackle tax avoidance too, including requiring a wider range of tax schemes to be reported to HMRC under the disclosure of tax avoidance schemes regime.

Labour's Plan to Close the Tax Gap

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