UK Still Taxes the Poorest More Than the Richest
New data from the Office for National Statistics shows that the poorest 10% of households in the UK are still paying a higher proportion of their income in tax than the richest. The UK’s tax system is meant to operate progressively, asking the richest to contribute more in order to tax the middle and poorest in society less; a principle that is still widely supported by the public.
However, our analysis of newly-released ONS data found that:
- The poorest 10% of households paid on average 48% of their income in tax in 2022/23
- The richest 10% of households, however, paid on average just 39% of their income in tax
- Council tax is a key source of disproportionate taxation, with the poorest 10% paying 7% while the richest 10% pay just 1.2%
- Similarly, VAT hits the poorest harder, with the poorest 10% paying 12% while the richest 10% pay just 3%
- The post-tax income for the richest 10% is £112,874, over 12 times higher than the poorest 10%’s post-tax income of £9,651.00
Unfortunately, this is merely the tip of the iceberg of the inequality in our tax system. The super-rich are shifting massive amounts into wealth and income from wealth, where taxation is even more disproportionate. This is how we get situations where millionaires like former Prime Minister Rishi Sunak can pay a tax rate of only 23% on £2.2m of income. As you get higher up the scale of the super-rich, the distortion becomes even more extreme. In 2024, billionaire James Dyson, 5th on the Sunday Times Rich List, paid just 0.68% of their total wealth in tax.
“These have been some of the hardest years in living memory, with massive spikes in bills and prices, collapsing public services, and entrenched inequality. Our tax system should be working to undo some of the damage – but instead, the super-rich are paying less in taxes than their cleaners.
This a time for political courage. The public, experts, and even millionaires themselves are demanding changes to the tax system that would fairly tax wealth.”
Priya Sahni-Nicholas, Executive Director of The Equality Trust
Notes
The Equality Trust is a registered charity that works to improve the quality of life in the UK by reducing economic inequality. UK income inequality is among the highest in the developed world and evidence shows that this results in poorer mental and physical health, higher violent crime, poorer educational outcomes and lower levels of trust. Inequality affects us all.
For further comments or to arrange an interview, contact info@equalitytrust.org.uk
All figures above are obtained from ONS Effects of Taxes and Benefits on UK household income: financial year ending 2023