What share of tax do the top 1 per cent pay? Less than you might have heard

a post by Adam Corlett for the Resolution Foundation blog

Late last year in a PMQs exchange about tax, the Prime Minister said that “the top 1 per cent of earners in this country are paying 28 per cent of the tax burden” – “the highest percentage ever”. She’s not alone in saying this. As statistics go, this one is remarkably popular in newspapers, parliament and other political debate. We can expect to hear it a lot more this week as well, as on Friday we will get an update of this and related data from HMRC.

But users of these statistics should be cautious. Firstly, they do not refer to all ‘earners’, just those who pay Income Tax. And of course the ‘tax burden’ stretches far wider than Income Tax. As this blog explores, these important distinctions make these statistics far less meaningful.

The HMRC data shows that the share of Income Tax paid by the top 1 per cent of people who paid Income Tax has indeed risen to 28 per cent, while the share paid by the top 10 per cent has risen to 59 per cent. This can be put down to tax policies that have made Income Tax more top-heavy, including a higher tax-free allowance and the ‘additional rate’ for top earners (now 45p but briefly 50p).

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Really useful charts show just where the money comes from.

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