Average income tax by area: The parts of the UK paying the most tax mapped

Taxpayers within the London borough of Wandsworth paid extra earnings tax in 2022/23 than taxpayers in Leeds and Birmingham mixed, new figures from HMRC reveal a stark distinction within the tax burden throughout the UK.

In the identical yr, Wandsworth residents paid £4.26 billion in earnings tax. This was greater than Leeds and Birmingham’s mixed whole of £4.23bn.

Taxpayers within the London borough of Hackney paid £1.54 billion in earnings tax in 2022/23, greater than residents paid in Glasgow, Scotland’s second-largest metropolis, as an entire, which paid £1.35 billion.

General, London and the South East accounted for 45% of the UK’s whole earnings tax of £240.7bn in 2022/23, in accordance with an evaluation of HMRC figures by accountancy agency UHY Hacker Younger.

Capital alone accounted for 1 / 4 (26.5%) of the full earnings tax paid.

The highest 20 areas with the best per capita taxes within the UK are all in London or the South East, in accordance with analysis by UHY Hacker Younger, which is partly attributable to tax threshold freezes and financial drag.

Neela Chuahan, Associate at UHY Hacker Younger, mentioned: “London and the South East at the moment account for nearly half of the UK’s whole earnings tax collections. This clearly displays the focus of high-income earners within the South-East, nevertheless it additionally displays long-standing tax coverage aimed toward shifting extra of the tax burden to larger earners.”

Supply: UHY Hacker Younger based mostly on HMRC information

10 years of earnings tax will increase

Over the previous 10 years since April 2016, London’s earnings tax burden has soared by 80.7%, from £35.3bn to £63.8bn. The evaluation confirmed this was a 48.4% enhance in the remainder of the UK.

London and the South East are dwelling to a disproportionate variety of excessive earners who pay tax on the 45% charge, and these areas constantly pay a bigger share of earnings tax than different elements of the nation.

Extra taxpayers within the Capital Area and South East will probably be going through a rise of their tax invoice as the brink for the 45% supplementary tax charge is decreased from £150,000 to £125,140 in April 2023.

In keeping with authorities estimates on the time, round 232,000 folks would pay the additional tax who wouldn’t have paid it had the brink remained at £150,000.

For folks with incomes between £125,140 and £150,000, the typical money loss in 2023-2024 was £621. For these with incomes over £150,000, the typical money loss was £1,256.

On the similar time, private allowances and better tax thresholds have been frozen from April 2021, dragging extra folks into larger tax brackets as their incomes rise, a course of generally known as ‘fiscal drag’.

Mr Chouhan added: “The freeze on allowances and the discount within the extra tax charge threshold have pulled extra taxpayers into larger brackets than ever earlier than, resulting in a surge in income, significantly from London, which has elevated by greater than 80% over the previous decade.”

“Whereas this highlights how dependent the Treasury has turn into on London and the south-east, it additionally raises issues in regards to the long-term competitiveness of the UK tax system and the chance that continued will increase within the tax burden might drive some excessive earners to maneuver overseas or cut back their financial exercise,” he mentioned.

Supply: UHY Hacker Younger based mostly on HMRC information