Mini Budget 2022 Who Pays Most Income Tax?
Published / Last Updated on 24/09/2022
Ahead of the Chancellor’s Emergency Budget later today, we decided to have a look at who pays income taxes in the UK. It does not matter what your politics are, this is not a political statement. Whether are blue, red, green, yellow, orange, or purple, there will be good and bad from the Budget. You can guarantee that whatever the budget contains, one side of ‘the House’ will applaud and the other will not. The Conservatives will cheer, and the Labour benches will criticise even though if the roles were reversed and the other side was in power, they would still be getting the same advice from Whitehall civil servants and probably take similar action on taxes.
To offer a balanced view on whether tax cuts or additional support is good or bad for low earners or higher earners, we thought it would be helpful to understand who pays income tax in the UK.
According to .gov.uk:
Approximately 30 million people actually pay income taxes in the UK of a population of over 68 million people. That’s just 44% of the population actually paying income taxes.
Income tax is by far the largest of all tax revenues in the UK.
- 1% of taxpayers, c300,000 people, pay 30% of all income taxes.
- 10% of taxpayers, c3m people, pay 90% of all income taxes.
- Put another way, 90% of taxpayers pay just 10% of the total income tax take.
Already, the wealthy are overtaxed and both middle and lower earners do not pay enough tax for the services that we all benefit from. That said, there are too many ‘fat cats’ getting huge bonuses and dividends when many of their workers are on minimum wage or on zero hours contracts and not even making a living wage. Why should a ‘fat cat’ get a bonus when some of their workers may be on minimum wage and claiming working tax credits or even heading to food banks? Equally, why should a senior manager not get a bonus if they work 7 days a week when some of their employees’ only want to work 15 hours per week so that they can keep social security benefits and have more family time than work time?
You can understand why higher earners will welcome tax cuts to which lower earners will object. You can also understand why lower earners will welcome help and if higher earners pay more tax then so be it.
A budget is always a difficult balancing act between attracting new business investment and skilled workers to the UK and stimulating whilst trying to help lower income households as well as ensuring that essential services such as the NHS are funded properly.
