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UK's top 1% of earners now paying a quarter of all income tax

[LONDON] The 1 per cent may not be popular among protest marchers, but in the UK they're now paying more than a quarter of all income tax.

A report by the Institute for Fiscal Studies published Wednesday found that the proportion of total income tax paid by the top centile rose to 27.5 per cent in the 2015-16 tax year from 24.4 per cent in 2007-08. Meanwhile, the government's policy of gradually raising the point at which people start paying income tax meant that the share of the adult population paying it fell to 56.2 per cent from 65.7 per cent.

The shift is partly the result of long-term trends. In 1978-79, the richest 1 per cent paid 11 per cent of total income-tax receipts. Since then, growing inequality has meant that the larger tax burden on the richest reflects their rising incomes.

"One implication of an income-tax base that increasingly relies on a smaller group of taxpayers is that the growth of receipts may be more unpredictable and risky," the IFS said.

"As the system becomes more reliant on a smaller subset of individuals, tax revenues become more sensitive to the composition of income growth, making revenues more uncertain."

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It's not just the very highest earners who have been affected. Over the same period, the number of people paying tax at the higher 40 per cent rate and above rose to 5 million from 3.9 million.


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