A record £190bn paid in income tax by High Earners

A record £190bn paid in income tax by High Earners

Additional and higher rate payers paid £190.6bn in income tax in the 2023-24 tax year has been revealed in the latest HMRC breakdown of income tax paid across the population depending on earnings. The 20% cohort paid £84bn in total, bringing income tax revenue to £274bn.

With no changes to the tax thresholds more taxpayers have been dragged into higher tax bands in the last few years with the tax burden for the highest earners soaring.

In 2023-24, the latest figures available, a total of 893,000 additional rate taxpayers paid 37.7% of total income tax at £103bn. This figure was up dramatically by 323,000 individuals, equivalent to a 57% hike in 2022-23, although there were a third less people paying the 45% rate, but still contributing 34% of total income tax, equal to £83.3bn.

The rise in additional rate taxpayers was the result of former chancellor Jeremy Hunt’s time at the Treasury, when he took the decision to cut the 45% threshold from £150,000 to £125,140 from April 2023.

The number of 40% taxpayers also increased by over 650,000, from 5.1m in 2022-23 to 5.76m in 2023-24, an increase of 14%. But the total amount of tax they paid only rose very slightly from £85.1bn in 2022-23 to £87.6bn in 2023-24, up 3%.

HMRC splits the figures into percentiles to break down the population. Comparing tax on income from the 2009-10 tax year, taxpayers in the 90th percentile would have been earning £39,200. In 2023-24, the equivalent percentile earned £54,300. If salaries had kept up with inflation, they would now earn £63,737, which would take them out of 40% tax.

The 75th percentile, those earning £26,300 in 2009-10, now earn £39,000. If their earnings had kept up with inflation they would be paid £42,762 a year.

Back in 2009-10, the 99th percentile earned over £105,000, in 2023-24 their earnings have gone up to £134,000, which would be equivalent £170,724 if pegged to inflation.

HMRC also analyses tax take by region, with London dominating the scene paying £71.1bn, while the wider southeast pays £49.8bn. This is equivalent to 44% of the total income tax paid at £120.9bn.

Next biggest payer is the East of England at £28.4bn, following by the North West with the big cities of Manchester and Liverpool paying £21.5bn.  Scotland pays £18.5bn, while Wales £7.5bn and Northern Ireland £4.25bn.

The government extended the tax threshold freeze to April 2031 at the 2025 Budget, meaning this financial pressure point won’t go away any time soon.

While the tax burden rises, this is coupled with a hike in the overall taxpayer population.

Overall, in 2023-24 there were 36.7m taxpayers, up from 34.5m in 2022-23, representing an increase of 8.9% in only one year. Their total pre-tax gross income was £1.53 trillion, 9.8% higher than the previous year’s £1.39 trillion.