In the midst of election manifestos and fiscal policy debate, the Institute of Fiscal Studies (IFS) has released an interesting statistic – the top 1% of income tax payers in the UK now account for around 30% of income tax paid to the government.
Broadly, the ‘top 1%’ of tax payers will earn over £120,000 per annum and their combined incomes amount to 14% of total national income. So, the Top 1%, earn 14% of income and pay 30% of income tax.
The IFS also revealed that recent above-inflation increases in the personal allowance (currently £12,500 pa) mean that 42% of adults now pay no income tax at all.
The UK currently sits mid-table when it comes to how much tax it raises per capita (internationally). However, particularly when compared to its EU counterparts, the UK tax system is one of the most progressive. As a result, UK income tax payment concentration is relatively high – in other words fewer people are paying more.
Of course, the election result on 12 December may bring about further changes to the above. If you would like to discuss your own income tax position, in the context of the election or otherwise, please contact one of our tax team.