One in six pay more than basic rate tax
Post by Mearns & Company in News
HMRC have updated their income tax payer data.
HMRC regularly updates data on income tax payers and in May it released its latest figures. These give an interesting insight into the potential drivers behind tax policy, and in particular, the emphasis on reducing tax avoidance.
- HMRC estimates there will be 29.7 million income taxpayers in 2015/2016, 1.6 million fewer than in 2010/2011, despite increased employment. The drop is mainly due to the significant increases in the personal allowance over recent years combined with low earnings growth.
- Of that almost 30 million, nearly 5 million will be higher or additional rate taxpayers – just over 1 in 6 of all taxpayers. In 2005/2006 – with additional rate tax not yet invented – the proportion of higher rate taxpayers was less than 1 in 8.
- While 81% of taxpayers are basic rate, in 2015/2016 they will only provide 32% of £171 billion the total income tax receipts. Higher rate taxpayers will supply 39%, while the 332,000 additional rate taxpayers will account for nearly 29% of all income tax paid.
The heavy dependence on additional and higher rate taxpayers helps to explain why pension tax reliefs have been squeezed and the more aggressive forms of tax avoidance have been attacked.
If pay more than the basic rate, the second pie chart is a reminder why the Chancellor will not rush to reduce your tax bill. Fortunately there are plenty of tried and tested measures you can take to lower your tax bill yourself.