What Percentage of Tax Revenue Comes From the Rich

Readers Question: Where does the UK government get its money from?

UK tax revenues come from a variety of sources. The main sources of tax revenue include:

1. Income tax (main tax rate is 20%)
2. National Insurance (NI) – a form of income tax
3. VAT (20% on most goods and services)
4. Corporation tax
5. Council Tax (local government)
6. Business rates
7. Excise duties (alcohol, cigarettes)
8. Other taxes include (stamp duty, carbon tax, airport tax, inheritance tax, capital gains)

Most tax is collected by HM Revenue and Custom.

HM Revenue and Custom are responsible for income tax, excise duties, VAT and NI. Tax revenue at HM Treasury

However, the central government also get revenue from other sources. Public sector finances at ONS (less detailed)

Tax revenue sources 2016/17

Value added tax VAT		135.4
Fuel duties		27.9
Business rates		26.8
Stamp duty land tax		12.4
Stamp taxes on shares		3.7
Tobacco duties		8.7
Alcohol duties		11.1
Vehicle excise duties paid by businesses		2.2
Other taxes on production		24.6
Income tax (gross of tax credits)		185.6
Corporation tax		55.9
Vehicle excise duties paid by households		3.7
Bank levy		3.0
Television Licence fee receipts		3.2
Misc tax inc. inheritance		7.5
Other central government taxes		17.4
National insurance contributions		125.9
Council Tax		30.4
Public Sector Interest and Dividends		6.3
Public Sector Gross Operating Surplus		47.2
Other Public Sector Receipts		5.2
Public Sector Current Receipts		726.5

Source: Public sector current receipts ONS

[abridged version, I left out some obscure taxes, which raise very little.

Pie chart of tax revenue

 Sources:

• Tax revenue at HM Treasury
• Public sector finances at ONS (less detailed) Dataset of tax revenue

List of Tax Receipts by Type of Tax

OBR forecast. OBR

How Much Income Tax do People Pay?

UK Income tax is based on marginal tax rates. See: marginal tax rates.

The table below is a useful guide to how much income tax you actually pay. It shows that income tax in the UK is progressive. (those on higher incomes pay bigger % of tax.

Changes in tax revenue 1997 – 2014

Tax and Inequality

The UK tax system plays a role in redistributing income.

• The poorest 10% pay £4,000 in tax (mostly indirect, VAT, excise duty). But, receive over £5,000 in tax credits and benefits.
• The richest 10% pay over £30,000 in tax (mostly direct, income tax). They receive around £2,000 in benefits.
• Overall, the average household pays £12,000 in tax and receives £5,000 in benefits.
• However, inequality in the UK has increased since 1980. See: Inequality in the UK

Tax receipts and government spending

In a recession, tax receipts tend to fall significantly as the government receive lower income tax and lower corporation tax.

Source of Graphs: UK Budget 2011 HM Treasury

Related

• Falling UK tax revenue
• Types of tax
• UK government spending
• UK national debt
• What does government spend its money on?
• Is the UK tax system fair?

We use cookies on our website to collect relevant data to enhance your visit.

Our partners, such as Google use cookies for ad personalization and measurement. See also: Google's Privacy and Terms site

By clicking "Accept All", you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.

You can read more at our privacy page, where you can change preferences whenever you wish.

What Percentage of Tax Revenue Comes From the Rich

Source: https://www.economicshelp.org/blog/4001/economics/tax-revenue-sources-in-uk/

Share this post