The UK’s top 100,000 taxpayers paid some 24% of all income and capital gains tax in 2021/22. This is according to The Wealth Club (a retail investment firm). The average bill was in the region of £559,000. This was up 18% compared with the previous year. The top 100 earners paid an average £46m each. This was up by 14%. So, according to the Wealth Club, taxes on the top 100,000 have risen by 45% over the past 5 years.
Interestingly, according to a recent report by PwC, the UK’s largest listed firms also saw their overall tax contribution increase to £89.8bn in the last financial year. This is the equivalent to 10% of total government receipts. Their analysis showed that the direct taxes borne by these companies rose by9.9% to £29.bn. Apparently the main contributors to this increase include higher employment taxes and the energy profits levy. Despite this higher tax bill, capital investment from the top 100 firms remained above £25bn. The 100 Group, which employed 1.8m people, paid an average of just over £40,000 per annum to each employee.
The concentration of tax contributions from both top businesses and individuals makes the UK vulnerable to the departure of high-value taxpayers. This is the view of John O’Connell, chief executive of the Tax-Payers’ Alliance, It is also the view of Alex Davies, Founder of the Wealth Club.
Thus the general consensus appears to be that Ministers should work towards creating a simpler and more competitive tax regime to prevent an exodus of big contributors. Simply increasing tax rates is not the solution. Increasing the turnover of UK businesses through incentives would work better. This would generate increased tax revenue, as a much better long-term way of growing our economy.