And, says the accounting consultancy firm, almost 50% of this fraud is being levelled at the private sector.
The average case value of private sector fraud, says the firm, has jumped from £2.5m in the January-June 2010, to £4.2m for the same period this year.
According to Hitesh Patel, a UK forensic partner with KPMG, the evolution of e-commerce - as well as increased reliance on automated payment systems and the ability of professional criminals to stay one step ahead - has swollen overall UK fraud figures.
Fraud levelled at UK businesses, he went on to say, tears at the very fabric of the economy.
"Although it is just as prevalent in larger organisations, the small and medium sized companies are more likely to suffer dire consequences as a result. For SMEs fraud can often lead to significant cash flow problems resulting in redundancies - and at worst a fight for survival", he said.
This is illustrated, he added, by a Wirral business brought to its knees by the in-house accountant who stole nearly £170,000 and then bragged about his lavish lifestyle on the internet.
This instance, says Patek, led to multiple job losses whilst the accountant took luxury holidays.
"The impact of fraud can be long lasting, affecting the organisation's growth and competitiveness. It may dampen customer and staff confidence, cause reputational damage and detract from simply running the business", he explained.
Delving into the report - part of KPMG's Fraud Barometer service - reveals that the majority of fraud is committed by professional criminals - fraud perpetrated by criminal gangs having risen by 107% in the first half of 2011.
Internal fraud committed by employees, notes the report, caused £225m worth of damage in the first half of 2011 - up from £181m in the same period last ear - with management fraud, averaging at £7.3m a case, and employee fraud around £708,000.
Patel says that, by operating in positions of trust and authority - and so helping them conceal their tracks with greater ease - the more senior the employee the more damage they can inflict when acting fraudulently.
KPMG says that, with the recent introduction of the UK Bribery Act and the National Crime Agency, it is clear that the government is taking the fight against fraud very seriously.
Working collaboratively with the government, says the firm, business are also strengthening their defences and taking a less reactive, more preventative stance.
So what is the solution to the fraud issue?
Patel argues that the culture and tone at the top of any organisations is critical to stamping out internal fraud.
"In order to guard against professional criminals, and those operating outside the business, companies must fully assess where in their operations they are vulnerable", he asserts.
"They should arm themselves with a set of controls that enable greater detection, such as whistle blowing lines and fraud risk reviews ,while thoroughly mining the wealth of data that sits within an organisation and if analysed would identify fraudulent activity", he says.
"This huge increase in the level of fraud hitting the private sector demonstrates the importance of ensuring that companies have mechanisms to prevent fraud and detect misconduct effectively", he adds.