Total Income Tax bills to hit £251bn in 2022/23

The total amount of Income Tax paid by people in the UK is expected to hit £251bn by 2022/23, new HMRC figures have indicated.

This figure would be up by almost a third in three years, after UK taxpayers paid £189bn in the 2019/20 tax year.

HMRC’s data also revealed that there were 31.5 million Income Tax payers in 2019/20, which is projected to increase to 34 million in 2022/23.

Northern Ireland had the lowest number of Income Tax payers at 2.5% in 2019/20, followed by the North East at 3.6%. The South East had the highest number of Income Tax payers at 14.8% in 2019 to 2020, while London had the second highest at 13.5%

Estimates for 2022/23 are projections based on the 2019/20 Survey of Personal Incomes and the Office for Budget Responsibility’s March 2022 Economic and Fiscal Outlook. Basic rate includes savers rate Income Tax payers and both Scottish starter and intermediate rate Income Tax payers.

Commenting on the data, Hargreaves Lansdown senior personal finance analyst, Sarah Coles, said: “Red hot inflation and frozen tax thresholds are set to drive income tax to an incredibly painful £251bn. That’s up almost a third in three years, and is way ahead of the government forecast at the Spring Budget last year, when it said this year’s tax bill would be around £230bn. It’s far more than any of us can afford at a time of runaway prices, and it’s going to get worse.”

HMRC’s figures also revealed that the top 50% of Income Tax payers received 74.4% of total income in 2019/20, or £859bn out of a total £1,160bn. This resulted in a 48.8 percentage point income inequality between the top and bottom 50% of Income Tax payers – where 0 percentage points is completely equal.

However, the top 50% of Income Tax payers were liable for 90.5% of total Income Tax in 2019/20, or £171bn out of a total £189bn. The top 1% of Income Tax payers make up the majority of additional rate Income Tax payers and received 12.3% of total income in the 2019/20 tax year.

Furthermore, the top 1% of Income Tax payers were liable for 29.0% of total Income Tax in 2019/20, although HMRC stated that this is projected to decrease to a 28.3% share of total Income Tax by 2022/23

“The number of people paying income tax has soared by 2.5 million in the past three years, partly as a result of the fact that the personal allowance hasn’t changed since April 2021, while prices and wages have climbed,” Coles added. “It means millions more people being stuck with a tax bill.

“Meanwhile, the freeze in the higher rate threshold meant the number paying higher rate tax has jumped alarmingly – up 16% in a year, while the number paying additional rate tax is up 12%. Three years ago just 12% of people paid higher rate tax – now it’s 16%.

"And things are only set to get worse. With the thresholds frozen until 2026, we’re going to see a steady stream of taxpayers crossing thresholds and paying eye-watering levels of tax. It adds insult to the financial injuries we’ve sustained as a result of rising prices.”

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