Half of UK income tax paid in south east

Half of UK income tax paid in south east

Apr 18, 2023

Nearly half of the income tax collected in the UK last year was paid by taxpayers in London and the south east, according to HMRC figures analysed by the Liberal Democrats.

Taxpayers in London and the south east paid a combined total of £87.6bn in personal taxes, more than the total income tax collected in the rest of England.

In total, 20 of the 25 parliamentary constituencies paying the most income tax were in London, with the others including ‘blue wall’ constituencies like Esher and Walton, and Hitchen and Harpenden.

Taxpayers in London paid a total of £51.6bn in income tax, an increase of £3.3bn from £48.3bn in 2019/20. In addition, the south east saw payments of £36bn from £34.8bn.

In the London borough of Kensington alone, residents paid £3.5bn in income taxes, compared to £4.5bn paid by taxpayers in the entire north east.

Taxpayers in the South West Surrey constituency paid £837m, more than the 10 most deprived constituencies in the country.

The figures come at a time when nearly one million people in London and the south east are set to be pushed into the higher 40% tax band by 2027/28 due to the freezing of tax thresholds by the Chancellor Jeremy Hunt.

The freezing of tax bands will lead to over £4.4bn more in income tax being paid by Londoners and ‘Blue Wall’ constituencies in the south east in the next year alone.

Under the personal allowance, anyone earning less than £12,570 does not have to pay income tax. The 20% rate applies to earnings of up to £50,270.

Above that, the rate is 40%, which has been frozen until 2028. As a result, 2.1 million extra taxpayers will be pulled into this bracket by 2028.

The third additional rate of 45% applies on incomes of more than £125,140. The number of those liable for this will rise by 350,000.

Liberal Democrat leader Ed Davey said: ‘This is a hammer blow to Middle England. Hardworking families are already struggling with rising food and energy bills, more tax hikes are the last thing they need. When will the pain end?

‘Every month, families are looking at their pay packet and feeling short-changed, with yet more of their wages eaten up by endless tax hikes. It is a toxic cocktail of taxes, mortgages and food bills.

‘The hard-working middle is already facing the highest tax burden in 70 years, yet Jeremy Hunt is set to compound their misery. It shows this Conservative government either doesn’t get it or doesn’t care and is taking voters across London and the south east for granted.’

Taxpayers in the east of England paid a total of £20.4bn, followed by the north west, where residents paid £15.2bn for the 2020/21 tax year.

In addition, residents in Scotland paid £12.9bn in income tax, followed by the west Midlands at £11.6bn.

The lowest regions were Wales, standing at £5.3bn, the north east at £4.5bn and Northern Ireland, which accumulated a total of £3bn, £490m less than in Kensington.