Government relies on top 500,000 taxpayers for a THIRD of all income tax and CGT

The top 1 per cent of taxpayers are responsible for around a third of the total paid in combined income tax and capital gains tax.

The Chancellor says taxing the wealthy more will be ‘part of the story’ in the Autumn Budget, but new figures indicate they already pay their fair share.

Half a million individuals paid £93.83billion in the 2023-24 tax year, equivalent to 33 per cent of the total £288.5billion raised, a Freedom of Information request by investment form Wealth Club shows.

The amount paid increased by nearly £4billion on the previous year, when the top 500,000 taxpayers paid £89.9billion in income tax and CGT.

The top 100 taxpayers paid just over £40million each in income tax and CGT in 2023-24, a total of £4.11billion, while the top 1,000 paid £10.4billion.

‘A very small group of individuals is responsible for a disproportionately large share of the nation’s tax revenue,’ says Alex Davies, founder and chief executive of Wealth Club.

The vast majority of the tax revenue comes from income tax, approximately £277billion, with £11.5billion coming from CGT.

Government figures show that the top 1 per cent of income taxpayers in 2022-23 had pre-tax income of over £201,000.

Income tax alone brings in a quarter of total tax revenue, and frozen thresholds since 2021 mean that more individuals have been dragged into higher tax brackets. The CGT allowance has been cut from £12,300 to £6,000 and now sits at £3,000.

The FOI shows that 2million more people pay income tax and/or CGT in 2023/24, compared to the previous year.

Calls for a wealth tax have been dismissed by the Treasury, but there are concerns that hiking taxes further on the wealthy could lead to some leaving the UK.

‘If just a handful of these wealth creators were to leave, the fiscal impact would be both immediate and severe,’ says Davies. 

‘The Government needs to think very carefully before slapping another round of taxes on wealthier individuals in the forthcoming Budget.’

Rachel Reeves has said she will not raise income taxes, although she may extend the freeze on tax thresholds, which would mean more people pay tax on their income.

She may look at bringing CGT rates in line with income tax, which would disproportionately affect the wealthy.

If the top 100 taxpayers decided to leave the UK, there would be a loss of £4.1billion in tax revenues, according to the figures.

‘Rather than penalising success, we should be creating a stable and attractive environment where entrepreneurs and wealth generators choose to remain, invest, and contribute to the nation’s long-term success,’ says Davies.

The most recent HM Revenue and Customs data shows in 2024-25 there are an estimated 37.4million income tax payers.