New data reveals that the UK is increasingly relying on a small number of high-income taxpayers to make up the bulk of its income tax revenue.
According to HM Revenue and Customs (HMRC), the 1.13 million people who pay the 45p rate are expected to contribute £124 billion this year, which represents more than 40% of all income tax collected by the Treasury.
This figure exceeds all income from corporation tax, fuel tax, council tax, and business rates combined. In comparison, 29.5 million basic rate taxpayers will contribute £82.8 billion, or 28% of tax revenue, while 6.3 million higher rate taxpayers will pay £93.7 billion, or 31%.
Labour’s Rachel Reeves is under pressure to re-examine her planned tax increases for the homeless and high earners after Treasury officials warned that targeting a small group of high earners could bring in less money than expected. Carl Emmerson, deputy director of the Institute for Fiscal Studies (IFS), warned that imposing higher taxes on a small group of people could cause behavioral changes, making it “a very dangerous strategy.”
With income tax generating $300 billion for the government this year, Sir Keir Starmer has insisted that those with “broad shoulders” must shoulder the heaviest burden as Labor prepares for a “brutal” budget on October 30.
