This briefing provides an overview of tax statistics, including recent trends, forecasts, and distribution of taxpayers.

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UK government raises over £800 billion a year in receipts – income from taxes and other sources – equivalent to around 37% of national income, as measured by GDP. The majority are from three main sources: income tax, National Insurance contributions (NICs) and value added tax (VAT). Together these raise over £470 billion. Income tax contributes £195 billion.   

Public sector receipts, by category

Recent trends

Between 2007/08 and 2009/10 receipts fell by around 1% of GDP, following the financial crisis and recession of 2008 and 2009. Receipts have since increased and have exceeded 37% of GDP for the past four years. Receipts were last consistently above this level in the mid-1980s.

Receipts from VAT and NICs are larger now, relative to the size of the economy now than they were in 1999/00. Income tax receipts are smaller than they were in 1999/00.

Top four tax receipts

Since the late 1990s receipts from stamp duty on property transactions, capital gains tax and council tax have all grown noticeably faster than the economy. Fuel duties and tobacco duties have declined.

Forecasts

The OBR produced their latest official receipts forecasts before the UK locked down to slow the spread of coronavirus. The forecasts, therefore, don’t offer a reliable guide as to how receipts may change.

The OBR’s initial analysis of the impact of coronavirus on the economy and public finances suggests that government receipts may decrease by over 10% in 2020/21, compared with 2019/20. 

Individual taxpayers: income tax paid, by income

Income tax payments are concentrated amongst those with the largest incomes. The 10% of income taxpayers with the largest incomes contribute over 60% of income tax receipts. This analysis only includes those who pay income tax. 

Distribution of income and income tax

Households: taxes paid, by income

The Institute for Fiscal Studies (IFS) – an economic think tank – has analysed how much households pay in tax. Their analysis – which covers around three quarters of tax revenues (including income tax, NICs, VAT, excise duties and council tax) – found that the 50% of households with the largest incomes contribute around 78% of taxes.

Taxes, by income

Impact of taxes across the income distribution

Overall, direct taxes (including income tax, NICs and council tax) lower income inequality. Richer individuals pay a greater share of their gross household income in direct taxes compared with poorer individuals.

Direct taxes, % of income

Measured relative to household income, those with lower incomes pay more in indirect taxes (VAT, duties etc). Measured relative to household spending, there is little variation in indirect taxes across the income distribution.

Indirect taxes as % of household spending

  • Commons Research Briefing CBP-8513
  • Author: Matthew Keep
  • Topics: Tax

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