While the UK’s benefits system is progressive, our tax system places a disproportionately heavy burden on the poorest when compared to the richest, exacerbating the UK’s already extreme levels of inequality.
Our briefing note analyses data from the Office for National Statistics, Effects of Taxes and Benefits on Household Income publication to find that:
- The poorest 10% of households paid on average 46.8% of their income in tax in 2014/15 (the most recent year, with stats released today)
- The richest 10% of households paid on average 34.4% of their income in tax
- Last year (2013/14) this difference was 45% – 35%, and the year before (2012/13) it was 43% – 35%. So while the proportion of income paid in tax has fallen slightly for the richest, it has increased for the poorest.
- An average household pays 33.8% of their income in tax
- Council tax is sharply regressive even after adjusting for rebates and Council Tax Benefit with the poorest 10% paying 7.1% of their income in council tax whilst the richest 10% pay only 1.5% of their income in council tax