UK’s richest pay in income tax revealed

London: Sixty of the wealthiest people in the UK collectively contributed more than £3bn a year in income tax, the BBC reported.

Each of the 60 individuals had an income of at least £50m a year in 2021/22, but many will have earned far more and probably pay large amounts in other taxes too.

The Institute for Fiscal Studies says these numbers show how reliant the tax system is on a small number of individuals. There is concern tax rises in this month’s Budget could prompt an exit of the super-rich, hurting UK finances.

Labour ruled out income tax changes, but Chancellor Rachel Reeves left the door open for other tax hikes.

A Treasury spokesperson said the government was committed to “addressing unfairness in the tax system”.

The amount of income tax the individuals paid is roughly equivalent to around two-thirds of Labour’s entire additional spending commitments in their manifesto earlier this year.

Swiss banking giant UBS predicted in July the UK would lose half a million of its millionaires by 2028, partly as a result of some switching to low-tax countries.

The IFS said the Treasury needed to be aware that a small number of this super-rich group leaving the country would create a “relatively big hole in its finances”.

But the Green Party argued claims taxing the wealthy more would lead to them leaving the UK were not credible.

The BBC reported last month about concerns within the Treasury that one of the main fundraisers for those pledges, the scrapping of the non-dom scheme, would raise far less money than first hoped.

Scrapping that scheme, which allows a UK resident to be registered abroad for tax purposes, was initially thought to be worth £1bn.

Government ministers have also said the previous Conservative government left a £22bn “black hole” in the public finances.

This has led to discussions within government about potential tax increases in the forthcoming Budget and in August the chancellor refused to rule out an increase in capital gains tax.

Stuart Adam, a senior economist at the IFS, said reports of wealthy individuals leaving the UK were currently just anecdotal.

But he warned that it would not take a mass exodus to cause issues for the public coffers, as “tax payments are very concentrated on a small number of people”.

“There’s clearly a risk there that Rachel Reeves has to think about,” Mr Adam said.

“Some of the tax changes that have been speculated are very concentrated on those at the top of the income distribution.”

There could “be more at stake from these people than just the income tax they’re paying” as the individuals in question would likely be paying large amounts in other forms of taxation such as capital gains, Mr Adam added.

Green Party co-leader Carla Denyer warned against taking threats by the super rich to leave the country seriously.

“This didn’t happen when changes were made to non-dom status in 2017,” she said.

“There are lots of reasons that the wealthy choose to live in the UK, including work, family and culture, and many are happy to pay a bit more if it means a happier and healthier society.”

The figures, which were compiled by HMRC, have been obtained through Freedom of Information laws and relate to 2021/22, the latest year for which data is available.

That year, the UK had a total income tax receipt of £225bn, with contributions from some 33m taxpayers.

The 60 people with incomes of more than £50m made up just 0.0002% of UK taxpayers and together paid 1.4% of the income tax receipt.

HMRC initially blocked the release of the information on the grounds that disclosing the figures would identify the individuals in question.

But the authority agreed to release the data after further requests by the BBC.

The IFS has said a way to dissuade wealthy individuals from leaving the UK could be to introduce an “exit tax”.

Some other countries “say that if you leave the UK, we will tax you on gains that have accrued while you’re here, even if you don’t sell the asset until later”, Mr Adam said.

“And symmetrically, we will exempt people who built up gains before they came to the UK, even if they sell assets while they’re here.”

A Treasury spokesperson said: “We are addressing unfairness in the tax system so we can raise the revenue to rebuild our public services.

“That is why we are removing the outdated non-dom tax regime and replacing it with a new internationally competitive residence-based regime focused on attracting the best talent and investment to the UK.”

Thin, red banner promoting the Politics Essential newsletter with text saying, “Get the latest political analysis and big moments, delivered straight to your inbox every weekday”. There is also an image of the Houses of Parliament.