Closing the UK’s tax gap is ‘not rocket science’, says Rachel Reeves

Labour also hopes to raise £2.6bn over the next parliament by closing “loopholes” in the government’s plans to abolish exemptions for “non-doms”, people who are not “domiciled” in the UK for tax purposes.

Defending the plans, Reeves told BBC Breakfast she could “ramp up” the number of HMRC staff “pretty quickly” if Labour won the election.

The chancellor announced changes to the non-dom status, which Labour had earmarked to fund commitments on schools and the NHS, in his March budget alongside an extension of the windfall tax on oil and gas firms.

In response, Reeves has said Labour would work on closing the tax gap, which had widened to £36bn in 2021-22, £5bn more than it had been the previous year, as an under-resourced HMRC struggled to collect revenues and manage compliance.

While the measures are expected to raise more than £5bn a year by the end of the parliament, only £2bn of that money will go to funding NHS appointments and primary school breakfast clubs, with the rest being kept back for other priorities.

Reeves told BBC Radio 4’s Today programme: “This is the worst economic inheritance since the second world war and it will constrain what an incoming government could do, but there’s always choices to be made.