The effects of taxes and benefits 2014-15

May 24, 2016 4:11 PM

New ONS statistics revealed today who paid how much tax in 2014-15.

It showed that:

  • The ten per cent of households with the lowest income paid the equivalent of 46.8 per cent of their salary to the taxman.
  • In only London, the South East and East of England did the average household pay more in taxes than in benefits.

Taxes paid as a percentage of gross income (original income plus cash benefits)

  • The bottom ten per cent of households had gross incomes of £10,700 in but paid out £5,012 in direct and indirect taxes.
    • Meaning they pay 46.8 per cent of their gross income to the taxman.
  • The top ten per cent of households had gross incomes of £110,062 but paid £37,830 of direct and indirect taxes.
    • Meaning they pay 34.4 per cent of their gross income to the taxman.
  • The average household had a gross income of £34,718 but paid £13,867 of direct and indirect taxes.
    • Meaning they paid 33.8 per cent of their gross income to the taxman.

Whichever way you cut it, we are paying a great deal of tax.

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Net taxes and benefits by income decile:

The top ten per cent of households by income had the highest cash contribution to the public purse.

  • They paid £29,751 more in taxes than they received in cash benefits and benefits in kind (i.e. benefits received in services e.g. education, NHS services) .
  • Average households paid £567 more in taxes than they received in cash benefits and benefits in kind.
  • The bottom ten per cent of households by income received £8,584 more in cash benefits and benefits in kind than they paid in taxes.

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Income ratios

  • Before taxes and benefits the ratio of top households’ income to that of the bottom households is 24.1 : 1
    • After taxes and benefits this falls to 6.0 : 1
  • Before taxes and benefits the ratio of average households’ income to that of the bottom households’ is 7.8 : 1
    • After taxes and benefits this falls to 2.6 : 1 

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Taxes paid by UK region:

  • The average households in the South East of England, London and the East of England paid more in taxes than they received in benefits.
  • Average households in all other parts of the country received more in benefits than they paid in taxes.

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 Taxes and benefits by housing tenure

  • Those average households in social rented housing received £12,903 more in benefits than they paid in taxes.
  • Average households in outright owner and unfurnished private rental households also received more in benefits than they paid in taxes.
  • Average households with owner mortgages or rental purchase agreements paid £10,947 more taxes than they received in benefits.
  • Average households in furnished private rented and rent free households also paid more in tax than they received in benefits.

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