New data reveals that the UK is increasingly reliant on a small number of first-tier taxpayers to generate a significant portion of its income tax revenue.
According to HMRC, the 1.13 million individuals paying the 45p rate are expected to contribute £124 billion this year, representing more than 40% of the total income tax collected by the Treasury.
This figure exceeds the total revenue generated by corporation tax, fuel duty, council tax and business rates combined. In comparison, 29.5 million basic rate taxpayers would contribute £82.8 billion, or 28%, of income tax revenues, while 6.3 million higher-rate taxpayers would pay £93.7 billion, or 31%.
Labour’s Rachel Reeves is facing pressure to reassess planned tax rises on non-residents and higher earners after Treasury officials warned that targeting a small group of high earners could result in lower-than-expected revenues. Karl Emerson, deputy director of the Institute for Fiscal Studies (IFS), warned that imposing heavy taxes on a small group of individuals could lead to changes in their behaviour, making it a “riskier strategy”.
With income tax generating £300bn for the government this year, Sir Keir Starmer stressed those with the “broadest shoulders” should bear the brunt as Labor prepares for a “painful” Budget on October 30.