Jan 24, 2023

Top 20% of earners pay majority of all income tax

According to a new analysis from think tank Civitas, the top 20% of earners pay two-thirds (66%) of all income tax.

In the tax year 2020/21, 83% of income tax came from the top 40% of earners, while the top 10% contributed over half the total - three times as much as the bottom 60%, despite the group being six times bigger.

The report examined income tax data published by the Office for National Statistics (ONS) to find the effects of taxes and benefits on household income.

It also showed that 54% of taxpayers - equivalent to 36 million individuals - paid less income tax than they received in state support in 2020/21.

This support, which totalled around £23,000 on average, included cash benefits and benefits in kind such as health and education spending.

The report's authors, Tim Knox and Daniel Lilley, say that this "net dependency ratio" is the highest on record.

This ratio fell from 52.5% in 2011 to 47.5% in 2019/20, and is still significantly higher than the 41.2% average seen between 1977 and 2000.

Commenting on the figures, Tim Knox said:

"The net dependency ratio would have been significantly higher if furlough payments had been counted as cash benefit payments rather than original income".

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