Britain’s reliance on 1.13 million top earners to generate £124bn in income tax has sparked debate over the sustainability of current tax policies.
- This elite group of taxpayers contributes over 40% of the country’s total income tax, surpassing revenues from multiple other major tax sources.
- Labour’s proposed tax increase on high earners and non-doms is under scrutiny amid concerns about its potential effectiveness.
- Experts highlight the risk that heavily taxing a small group may alter taxpayer behaviour and reduce revenue.
- The upcoming Labour budget places significant focus on ensuring the wealthiest bear the heaviest fiscal responsibilities.
According to HM Revenue and Customs, 1.13 million individuals paying the 45% tax rate are expected to contribute £124 billion this year. This represents more than 40% of all income tax collected by the Treasury, surpassing the combined revenue from corporation tax, fuel duties, council tax, and business rates.
In contrast, 29.5 million basic-rate taxpayers will deliver £82.8 billion, accounting for 28% of total income tax revenue. Additionally, 6.3 million higher-rate taxpayers will pay £93.7 billion, amounting to 31% of the total.
Labour’s shadow chancellor, Rachel Reeves, is facing pressure to reconsider her planned tax increases on the wealthiest, including non-domiciled individuals. Treasury officials warn that targeting a small group of top earners might generate less revenue than expected.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, cautions that focusing heavily on a limited number of taxpayers could prompt behavioural changes, describing this as a ‘riskier strategy.’
The projected income tax revenue for this year stands at £300 billion. As Labour approaches its ‘painful’ budget on October 30, Sir Keir Starmer stresses the importance of those with the ‘broadest shoulders‘ shouldering the heaviest tax burden.
The concentration of tax responsibility among a small group of high earners raises critical questions about the sustainability and impact of Britain’s fiscal policies.
