The number of people who fall into the ‘higher earner’ category-that is those who earn over £34,371 a year and pay either 40 or 50 per cent tax, make up only 14 percent of the UK’s tax payers. Despite high earners making up such a small proportion of total tax payers, they pay over 60 per cent of total income tax paid in the UK.
60% of Britain’s income tax bill is paid by highest earners
From a tax rebate perspective if you are 40% tax payer, any tax relief available for expenses incurred because of your job is refunded at 40%, in comparison to only 20% if you pay tax at the 20% threshold. This is one positive to take from paying tax at the higher rate.
Whether you have any job related expenses which tax relief can be claimed on should be taken into consideration when you review your tax position. It is common for claims for job related expenses such as business mileage to result in tax rebates of thousands and not just hundreds of pounds.
While the number of people paying either the higher 40 per cent tax rate or the top-rate 50 per cent level, rises to 4.13m this year, and the percentage of the overall tax bill paid by these high earners reaches 61 percent, the amount of people required to pay tax overall is expected to fall by over 1 million as personal allowance increases. This increases the share of Britain’s income tax bill that will be footed by high earners.
The top-earning one per cent of the population are expected to pay around £42bn in income tax this year. This is more than a quarter of the total income tax paid in the UK. This applies to the 299,000 people in the UK who earn more than £150,000 a year.
