Correction: an earlier version of this press release referred to the "top 11-15 per cent" seeing the biggest increase in the share of income tax liabilities. This should have read "top 11-25 per cent" and has now been corrected.
Embargoed: 20:00, Wednesday 6th August 2025
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Top one per cent will pay 26.6 per cent of all income tax in 2025-26, down from 30.7 per cent in 2021-22.
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Almost 2.9 million more people now paying basic rate of income tax, with over 2.6 million now paying higher rate.
- TPA calls for reversals on anti-affluence tax policies.
The proportion of income tax paid by the highest earning taxpayers has slumped, it has been revealed, as Rachel Reeves is warned that she may have to raise vast amounts of tax on middle England to fill the fiscal black hole created by the 2024 budget.
Analysis by campaign group the TaxPayers’ Alliance of data from HMRC has found that the top one per cent are expected to pay 26.6 per cent of all income tax receipts in 2025-26, which is down significantly from the 30.7 per cent they paid in 2021-22. This contrasts with other groups, who are seeing their share of income tax liabilities increase.
The National Institute of Economic and Social Research has said that Rachel Reeves may need to increase taxes by as much as £50 billion to meet her fiscal rules, and have suggested increases to council tax and freezes to tax thresholds as two significant ways to fill the gap. The TPA is warning that this is the “inevitable result” of a series of catastrophic tax raids on the wealthy which has contributed to a global record number of millionaires leaving, as tracked by the Adam Smith Institute.
The biggest increase in the share of income tax liabilities has been for the top 11-25 per cent, who will see their proportion of total income tax receipts increase from 15.1 per cent to 17 per cent. But the proportion of total income tax receipts is increasing for every group, including for the bottom 50 per cent who now will pay 9.9 per cent, up from 9.2 per cent. Almost 2.9 million more people are paying the basic rate of income tax compared to 2021-22 while over 2.6 million more are paying the higher rate. Yorkshire and the Humber is the region with the largest percentage increase of total income taxpayers, at 20 per cent.
The TaxPayers’ Alliance is calling on the government to reverse a whole suite of anti-affluence tax measures, including VAT on private schools, changes to agricultural and business property relief, second home premiums for council tax and the abolition of non-dom status. It is also calling on the government to decisively and unequivocally rule out exit taxes and wealth taxes.
CLICK HERE TO READ THE RESEARCH
Key findings:
- In 2025-26, the top one per cent of income tax payers earned 12.6 per cent of total income and paid 26.6 per cent of income tax. The latter of these is down from 30.7 per cent in 2021-22. This means the top one per cent of income tax earners will have paid 2.1 times their share of income taxes in 2025-26.
- The largest increase in income tax liabilities between 2021-22 and 2025-26 was seen in the top 11-25 per cent of wealth with an increase of 1.9 percentage points.
- Almost 2.9 million more people will have paid the basic rate of income tax in 2025-26 than in 2021-22, while over 2.6 million more will have paid the higher rate.
- Including other rates, in 2025-26 almost 6 million more people are forecast to be paying income tax than in 2021-22 when thresholds were frozen.
- Yorkshire and the Humber is set to be the UK region with the largest percentage increase in the total number of people paying income tax between 2021-22 and 2025-26. There has been a 20 per cent increase in the total number of income tax payers in the region.
- In 2025-26, Yorkshire and the Humber is also expected to have had the largest percentage increase in basic rate taxpayers at 14 per cent. This is despite it being the region with the third lowest average earnings in the UK.
- The South East is set to see the largest increase in total income tax payers since 2021-22, with an additional 831,000 people paying income tax in 2025-26. This includes 330,000 and 424,000 more people paying the basic and higher rate respectively.
CLICK HERE TO READ THE RESEARCH
John O’Connell, chief executive of the TaxPayers' Alliance, said:
"This is the sad but inevitable result of successive governments’ assortment of anti-affluence tax policies, which penalise aspiration and success.
“The UK is now trapped in a doom loop with the chancellor desperately scrabbling around for more cash to fill the fiscal black hole and increasingly finding her only option is to come after the middle classes.
“Rachel Reeves needs to now show some humility and reverse the policies that have done so much to drive away high earners.”
TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)
Media contact:
Elliot Keck
Head of Campaigns, TaxPayers' Alliance
[email protected]
24-hour media hotline: 07795 084 113 (no texts)
Notes to editors:
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Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
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TaxPayers' Alliance's research council.