Number of people paying income tax has surged since 2010, finds TaxPayers’ Alliance

Embargoed: 00:01, Friday 9th February 2024

• Number of people paying income tax has increased by 4.5 million since 2010
  
• Of that number, an additional 1.7 million people are paying the basic rate of income tax
• Since thresholds were frozen in 2021-22 The largest percentage increases in the number of new taxpayers are in Yorkshire and the Humber, Wales and the North East
  
  

Millions more people are paying income tax than in 2010, according to new research by the TaxPayers’ Alliance, with the total number surging from 31 million to 35.5 million, an increase of 4.5 million.

In 2014, current foreign secretary, Lord Cameron, described lifting millions of people out of income tax while prime minister as “one of the proudest things I have done in government.” That was after the then Coalition government lifted the personal allowance from £6,475 to £10,000.

Yet 1.7 million more people are paying the basic rate of income tax, with the total number increasing from 26.8 million to 28.5 million since 2010.  Since thresholds were frozen in 2021/22, an additional 1.1 million are paying the basic rate of income tax and an additional 1 million are paying the higher rate.

Since thresholds were frozen, the North East, Yorkshire and the Humber and Wales are set to be the UK regions with the largest percentage increases in the total number of people paying income tax and in the number of people paying the basic rate. The largest percentage increases in the number of people paying the higher rate were Wales, the North East and Northern Ireland. 

By contrast, London saw the smallest percentage increase of people paying income tax since 2021/22, both in terms of the basic rate, the higher rate and the additional rate.

Frozen thresholds have been a major contributor to the record high tax burden in the United Kingdom, with TPA analysis of the academic literature on tax and growth finding a consensus that a high tax burden dampens growth. The TPA is campaigning for a cut to income tax.

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Key findings:

• Almost 1.1 million more people will have paid the basic rate of income tax in 2023-24 than in 2021-22, while more than another million will have paid the higher rate.
• In 2023-24, there is set to have been almost 2.5 million more people paying income tax than in 2021-22 when the thresholds for the personal allowance and higher rate were frozen.
• The North East, Yorkshire and the Humber and Wales are set to be the UK regions with the largest percentage increases in the total number of people paying income tax. These are the three regions which also have the lowest average earnings in the UK.
• Since 2021-22, the North East will have had the largest percentage increase in basic rate taxpayers at more than six per cent or 70,000 people. Wales will have had the largest percentage increase in higher rate taxpayers at over 36 per cent or 46,000 people.
• In 2023-24, the North East, Wales and the West Midlands will have seen a 100 per cent increase in the number of people paying the additional rate since 2021-22.
• The South East will see the largest increase in total income taxpayers, with an additional 110,000 and 159,000 people alone paying the basic and higher rate respectively.

READ THE BRIEFING NOTE 

Darwin Friend, research director of the TaxPayers' Alliance, said:

"Taxpayers in every corner of the United Kingdom are struggling with the bruising impact of tax rises and threshold freezes.

“The transformation of Britain into a high-tax, low-growth economy has hit almost every household, from Edinburgh to Eastleigh and Cardiff to Colchester.

“Ministers must use the budget to give taxpayers the income tax relief they desperately need.”

TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)

Elliot Keck
Head of Campaigns, TaxPayers' Alliance
[email protected]
24-hour media hotline: 07795 084 113 (no texts)

Notes to editors:

1. Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
   
   
2. TaxPayers' Alliance's advisory council.
   
   
3. The TaxPayers’ Alliance is campaigning for a cut to income tax