Richest

Amount UK’s Richest Pay in Income Tax Revealed

The UK’s wealthiest 60 individuals collectively paid more than £3 billion in income tax during the 2021/22 fiscal year, new figures reveal. Each of these individuals earned at least £50 million annually, with many likely contributing even more through additional taxes such as capital gains.

The amount contributed by this small group equates to roughly two-thirds of Labour’s additional spending commitments outlined in their recent manifesto. While Labour has ruled out income tax hikes, Chancellor Rachel Reeves has not dismissed the possibility of other tax increases in the upcoming Budget.

Concerns have been raised that significant tax rises could drive some of the country’s super-rich to relocate to lower-tax jurisdictions, potentially damaging the UK’s finances. Swiss banking giant UBS recently projected that the UK could lose up to 500,000 millionaires by 2028 due to a combination of tax policies and economic factors.

The Institute for Fiscal Studies (IFS) echoed these concerns, warning that even a small number of wealthy individuals leaving could create a significant gap in public finances, as a considerable portion of tax revenue comes from this small group. Stuart Adam, senior economist at the IFS, pointed out that “tax payments are very concentrated on a small number of people,” making any departure of the super-rich a serious risk for the Treasury.

The Green Party, however, dismissed claims that taxing the wealthy more would drive them out of the UK. Co-leader Carla Denyer highlighted that such fears were exaggerated, noting that previous tax reforms, such as changes to the non-domiciled (non-dom) status in 2017, did not result in a mass exodus of the super-rich.

“There are many reasons the wealthy choose to live in the UK, from work opportunities to family and culture, and many are willing to pay more in taxes to support a fairer society,” Denyer argued.

The £3 billion income tax contribution, revealed through a Freedom of Information request by the BBC, represents 1.4% of the UK’s total income tax receipts, despite the 60 individuals making up just 0.0002% of all taxpayers. The total income tax collected in 2021/22 was £225 billion from approximately 33 million taxpayers.

The release of the figures follows an initial attempt by HMRC to block the disclosure, citing concerns that the data could lead to the identification of the individuals involved. However, the information was eventually made public after further requests.

The IFS has proposed the introduction of an “exit tax” as a possible deterrent to prevent wealthy individuals from leaving the UK. This tax would apply to gains accrued during their time in the country, even if the assets were sold after they had relocated. Similar systems have been adopted in other nations to maintain their tax base.

A Treasury spokesperson reiterated the government’s commitment to addressing unfairness in the tax system, with plans to replace the non-dom regime with a new residence-based tax system aimed at attracting top talent and investment.

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