This briefing provides an overview of tax statistics, including recent trends, forecasts, and distribution of taxpayers.Jump to full report >>
UK government raises over £785 billion a year in receipts – income from taxes and other sources – equivalent to around 37% of GDP. The majority are from three main sources: income tax, National Insurance contributions (NICs) and value added tax (VAT). Together these raise over £460 billion. Income tax contributes £192 billion.
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 are now larger than at any time since the mid-1980s, relative to the size of economy – as measured by GDP.
Receipts from VAT and NICs are larger now, relative to the size of the economy now than they were in 1999/00, while income tax receipts are smaller.
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 duty and tobacco duties have declined.
The Office for Budget Responsibility (OBR) – the UK’s public finances watchdog – forecasts that government revenues in 2023/24 will be larger than now relative to the size of the economy. Income tax and NICs are forecast to increase while VAT receipts are forecast to decrease a little, relative to the size of economy.
Some taxes – including corporation tax and tobacco duties – are forecast to grow more slowly than the economy, so will be relatively less significant in 2023/24.
Income tax payments are concentrated amongst those with the largest incomes. The 10% of income taxpayers with the largest incomes contribute around 60% of income tax receipts.
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.
Overall, direct taxes (including income tax, NICs and council tax) lower income inequality. Richer households pay a greater share of their gross income in direct taxes compared with poorer households.
Measured relative to household spending, there is little variation in indirect taxes across the income distribution.
Commons Briefing papers CBP-8513
Author: Matthew Keep