What do the wealthiest pay in tax?

20 January 2017
What was claimed

The wealthiest are paying more and more tax.

Our verdict

There’s no one-line answer: it depends on who you define as the wealthiest.

“The amount of tax paid by the wealthiest in our society has risen and risen in the last few years”

Chris Grayling, 20 January 2017

That depends on two things: which taxes you’re looking at, and who you count as the ‘wealthiest’.

We’re also limited in what we can know by the data that’s available. For example, there’s a lot we can say about what the highest earners pay, but figures by wealth are harder to come by.

Here we give figures based on what the highest earners pay, but remember this isn’t the same as the ‘wealthiest’. We’ve asked Mr Grayling how he’d define the term.

The share of income tax contributed by the top 1% has generally been rising

You might see this kind of claim a lot—including during last week’s Question Time—referring to how much income tax the top 1% of earners are paying.

This year the top 1% will pay 27% of all the income tax the government takes in. That’s down slightly on last year, but higher than the share in previous years.

But this is only part of the picture. Income tax might be the government’s biggest single source of income, but three-quarters of the government’s revenue comes from elsewhere.

The share of total taxes contributed by the top 10% isn’t changing

That’s why it’s better to look at what top earners pay in all taxes: those on what people earn like income tax and national insurance, plus those on what people buy like VAT and tobacco duties.

The published figures only show what the top 10% of earners contribute, but it’s a start.

In 2014/15, an average household in the top 10% paid nearly £38,000 in taxes. As a group, they contributed about 27% of all taxes paid. A household in the bottom 10% would have paid just over £5,000.

The share paid by the top 10% is hardly changing. In the last six years it’s been about 27%.

Of course, we’d expect the richest to be contributing more to the total tax pot: they earn more and spend more, so there’s more to tax.

But what about what the richest pay out of their own budgets?

The top 10% are paying a similar share of their income in tax

The latest figures show the highest earning 10% paid about a third—34%—of their income in tax. To put that in money, in 2014/15 a typical top 10% household would have got £110,000 in income and benefits, and would have lost about £38,000 of it in taxes of various kinds.

Again, that share has hardly changed in recent years, varying from 33% to 35%.

That share is slightly more than what people on lower incomes pay. Only the bottom 10% buck the trend: they pay about 47% of their income in tax.

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