In the UK, anyone who earns more than £12,570 during the 2024/2025 financial year should pay income tax. However, there are some situations where you don’t pay tax, such as earning tax-free interest with a cash ISA or tax-free profits with a stocks and shares ISA.
We look at how many people are paying tax, where the UK’s tax revenue comes from and what the money is spent on.
There were an estimated 34 million income taxpayers in 2022/23, up from 32.7 million in 2021/2022. Most of these are basic rate income taxpayers – earning £50,000 or less – making up 27.2 million taxpayers. There are also 5.5 million higher rate income taxpayers and 629,000 additional rate income taxpayers.
| Tax year | Number of income taxpayers |
|---|---|
| 2019/2020 | 31.5 million |
| 2020/2021 | 32.2 million |
| 2021/2022 | 32.7 million |
| 2022/2023 | 34 million |
In 2021/22, the average household paid £15,200 in direct taxes each year, including income tax, national insurance, council tax and other duties. This means the average UK resident paid £6,440 in taxes over the year, based on the fact there are 2.36 people per household.
Research has shown that the top 10% of income taxpayers contribute around 60% of income tax. The top 50% of income taxpayers contribute the vast majority of income tax payments (90.5%).
In the 2022/23 tax year, the government collected £924 billion in UK taxes. This is a 1% increase from the 2021/22 tax year when the government collected £915 billion in taxes.
The main components of tax revenue are income tax (27%) and national insurance (19%), totalling nearly half of the tax collected by the UK government. The remaining half is received from VAT (18%), corporation tax (9%), capital taxes (5%), council tax (5%), business rates (3%), fuel duty (3%), tobacco and alcohol duty (2%) and other taxes (10%).
| Tax revenue source | Amount | Percentage of total |
|---|---|---|
| Income tax | £250 billion | 27% |
| National insurance | £179 billion | 19% |
| VAT | £162 billion | 18% |
| Corporation tax | £87 billion | 9% |
| Capital taxes | £44 billion | 5% |
| Council tax | £42 billion | 5% |
| Business rates | £25 billion | 3% |
| Fuel duty | £25 billion | 3% |
| Tobacco and alcohol duties | £22 billion | 2% |
| Other taxes | £88 billion | 10% |
The UK government had a total public sector expenditure of £1.16 trillion in 2022/23, £131 billion more than they received in receipts.
The majority of public spending by the UK government goes on public health (£211.6 billion) and welfare (£208.8 billion). A significant portion also goes on interest payments for national debt (£128.4 billion), state pensions (£110 billion) and education (£105.5 billion).
Overall, around half of UK public spending is on health, welfare and state pensions, with a combined total of 49.7%, meaning much of taxpayer money goes to these areas. However, 12% is also spent on debt interest payments.
| Area | Public sector expenditure | Percentage of total spend |
|---|---|---|
| Health | £211.6 billion | 19.80% |
| Welfare | £208.8 billion | 19.60% |
| National debt interest | £128.4 billion | 12% |
| State pensions | £110 billion | 10.30% |
| Education | £105.5 billion | 9.90% |
| Business and industry | £81.5 billion | 7.60% |
| Defence | £55.5 billion | 5.20% |
| Public order and safety | £43.9 billion | 4.10% |
| Transport | £43.6 billion | 4.10% |
| Government administration | £21 billion | 2% |
| Housing and utilities | £17.8 billion | 1.70% |
| Culture | £14 billion | 1.30% |
| Environment | £13.9 billion | 1.30% |
| Outstanding payments to the EU | £6.9 billion | 0.60% |
| Overseas Aid | £5.1 billion | 0.50% |
Most people in the UK get a personal allowance, which is £12,570 for 2023/2024. You are not taxed on any income up to this amount.
There are also various circumstances where Brits aren’t expected to pay any tax at all:
In 2021/2022, the tax gap is estimated to be 4.8% of the total tax due, which equates to £35.8 billion in unpaid tax. The largest share of this tax gap is a result of “failure to take reasonable care”, making up 30% or around £10.7 billion. Other top reasons for missing taxes include error (£5.4 billion) and tax evasion (£4.7 billion).
| Reason for tax gap | Percentage of total |
|---|---|
| Failure to take reasonable care | 30% |
| Error | 15% |
| Evasion | 13% |
| Legal interpretation | 12% |
| Criminal attacks | 11% |
| Non-payment | 9% |
| Hidden economy | 6% |
| Avoidance | 4% |
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