A Closer Look at the UK's Tax System

A discussion on the UK's tax structure, its fairness, and its efficiency.


Charles Tateson

11/29/20233 min read

man writing on paper
man writing on paper

This blog post sheds light on the complexities of the UK tax system and its impact on high net worth individuals.

The Tax Burden of the Few?

In the complex world of UK taxation, a startling fact has surfaced: just 100,000 individuals, a mere 0.3% of taxpayers, have contributed almost a quarter of all income tax and capital gains tax, amounting to £55.9 billion.

This astonishing figure, revealed by a Freedom of Information request to HMRC, highlights the disproportionate tax burden shouldered by the nation's wealthiest.

The Astonishing Statistic: Unveiling the Tax Contributions

Substantial Contributions:

The UK's elite taxpayers, on average, paid £559,000 each in income and capital gains tax during the specified period, reflecting an 18% increase from the previous year.

Despite constituting only 0.3% of taxpayers, this select group contributed 24.1% of HMRC's annual income and capital gains tax revenue.

Record-Breaking Figures:

The top 100 taxpayers collectively paid a record-breaking £4.6 billion in income and capital gains tax in 2021-22, equating to an astonishing £46 million per individual. This marks a significant surge from the £2.1 billion contributed in 2017-18, indicating a 14% year-on-year increase.

Growing Tax Burden:

The overall income and capital gains tax paid by these individuals surged by 45% over the past five years, underscoring not only an increase in the amount paid but also a heightened burden on this exclusive group.

Implications of Tax Policy Changes:

The analysis suggests that frozen thresholds and the reduced entry point for the 45% additional rate tax will likely result in an even higher share of tax being paid by the wealthiest individuals in the future.

Mobile Wealth and Potential Consequences:

Wealthy individuals demonstrate mobility, with an estimated 3,200 millionaires expected to leave the UK in the current year. This poses a potential risk, as the top 100 taxpayers contribute £4.6 billion, and if the top 1,000 followed suit, the gap in the country's finances could reach a staggering £11.5 billion.

Key Findings

person holding magnifying glass near desk globe
person holding magnifying glass near desk globe

The figures debunk the myth that the wealthy are not paying their fair share of taxes, highlighting the substantial contributions made by the top 100,000 individuals. As tax policies evolve, careful consideration must be given to the potential consequences of wealth migration, emphasising the delicate balance that policymakers must strike.

Final Thoughts

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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