The top one per cent account for a third of tax revenue
The top one per cent of taxpayers account for around a third of all income tax and capital gains tax paid in 2023-24, it has been revealed.
According to HMRC, the top 500,000 taxpayers contributed £93.8bn last year, which represented 33 per cent of the total raised.
The top 100,000 paid £54.9bn and covered a fifth of total receipts, according to a Freedom of Information request obtained by the investment service Wealth Club and provided to The Times.
The balance in tax paid between the super rich and Brits across the country uncovers the Treasury’s reliance on a small portion of the population to pay for expenses.
Rachel Reeves has indicated that she will target the wealthy in next month’s Budget, arguing that those with the “broadest shoulders” should pay their “fair share,” of taxes.
In a statement to the newspaper, a Treasury spokesperson said: “The UK’s tax system is progressive, meaning those with higher incomes contribute more, helping to support vital public services.”
Income tax is the largest revenue-raiser for the UK government while capital gains tax receipts are more volatile on a monthly basis.
Precarious public finances and tax intake
In the most recent set of data published by the Office for National Statistics (ONS), it was shown that HMRC collected £32bn more last month than at the same time in 2024.
Income tax and national insurance contributions totalled £235.3bn on the month, with Quilter’s tax expert Rachael Griffin pointing out that the figure was “artificially inflated by the freeze to tax thresholds, which has steadily dragged more earners into higher tax bands as wages rise”.
“This doesn’t point to a roaring economy but a sign of a Treasury increasingly reliant on extracting more from the same taxpayers,” Griffin said.
“With fiscal drag proving such a dependable source of income, the Chancellor may now be tempted to delay any unfreezing of thresholds, despite the political awkwardness that would bring.
“Reversing the freeze was positioned as a signature move in her first Budget but maintaining it would quietly preserve billions in extra tax revenue.”
The public purse is in a precarious situation, with the upcoming Office for Budget Responsibility (OBR) set to forecast a £30bn shortfall in the last year of the forecast period on the difference between day-to-day spending and tax receipts.
Government borrowing surges
Rachel Reeves’ fiscal rules state the two should be matched in the last year.
Capital Economics’ Ruth Gregory said government borrowing in September had been higher than OBR forecasts as there had been slow growth in tax receipts over the last year despite a £40bn tax raid at the last Budget, including rises to employers’ national insurance contributions (NICs).
“This is surprising given the economy hasn’t been terribly week and perhaps suggests compositional effects are at play, such as the rise in food inflation prompting more spending on zero-VAT rated food items,” Gregory said.
“Of course, it is not borrowing in 2025-26 that matters, but what the OBR forecasts the current budget to be in 2029-30, which is when the Chancellor’s fiscal mandate bites.”