Highest earners pay more than one third of all tax

The Institute for Fiscal Studies (IFS) has revealed that the top 1 per cent of earners in the UK account for more than one third of income tax paid to the Government.

According to the IFS, above-inflation increases in the personal allowance to £12,500 a year mean that 42 per cent of adults in the UK pay no income tax, while the top 1 per cent pay well over one third of it.

Interestingly, the increase in income tax share paid by the highest earners is not because of a rise in the amount they earn but because of progressive tax policy reforms.

As the IFS briefing paper points out, there have been income tax rises for high-income individuals, while increases in the personal allowance have reduced or eliminated income tax for those on lower incomes.

Despite this, the poorest 10 per cent of households have lost 7 per cent of their income since 2010, rising to 18 per cent among families with children.

Meanwhile, the highest earning 10 per cent of the population have seen their incomes fall by only 4 per cent.

According to the think tank the UK’s overall tax take has risen to 34.4 per cent, the highest sustainable level since the late 1940s but despite this, UK taxes are well below average for the G7 group of industrial nations and lower than in most countries in Western Europe.

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Posted in News.