According to HM Revenue and Customs (HMRC), the 1.13 million individuals paying the 45p rate are expected to contribute £124 billion this year, which represents more than 40% of all income tax collected by the Treasury.
This figure surpasses the total revenue generated by corporation tax, fuel duties, council tax, and business rates combined. By comparison, the 29.5 million basic-rate taxpayers will contribute £82.8 billion, or 28% of income tax revenues, while 6.3 million higher-rate taxpayers will pay £93.7 billion, or 31%.
Labour’s Rachel Reeves is facing pressure to reassess her planned tax increases on non-doms and higher earners after Treasury officials warned that targeting a small group of top earners could yield less revenue than anticipated. Carl Emmerson, deputy director of the Institute for Fiscal Studies (IFS), cautioned that heavily taxing a small group of individuals could prompt changes in their behaviour, making it a “riskier strategy.”
With income tax generating £300 billion for the government this year, Sir Keir Starmer has emphasised that those with the “broadest shoulders” must bear the heaviest burden as Labour prepares for a “painful” budget on October 30.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
