Are the Wealthy in the UK the Key to Tax Revenue? The Astonishing Contribution of the Top 1% and Its Impact

Are the Wealthy in the UK the Key to Tax Revenue? The Astonishing Contribution of the Top 1% and Its Impact

2025年10月22日 18:25

"1% Holds a Third"—The Battle Over the Ultra-Minority Supporting UK Taxes and the "Exodus"

According to new HMRC data reported on October 21, the top 1% of taxpayers in the UK bore a third (33%) of the total income tax and capital gains tax (CGT) burden for the fiscal year 2023/24. This group comprises about 500,000 individuals. Among them, the top 100,000 alone contributed nearly a fifth. These figures were obtained by the investment service Wealth Club through a Freedom of Information (FOI) request. This data highlights the reality of the government's heavy reliance on a small number of high-income earners.Business Matters


The significant weight of this burden complicates policy steering. Particularly, the abolition of the non-domicile (non-dom) regime in April has drawn attention to the impact of high-net-worth individuals' "geographical mobility" on the UK's tax base. With the abolition, taxation on global income and assets for those residing in the UK for over four years has expanded, and the scope of inheritance tax has widened. From the private sector, warnings abound that excessive tax increases could prompt wealthy individuals to relocate, ultimately reducing tax revenue.Business Matters


Meanwhile, the reality of the "wealthy exodus" is viewed differently. For instance, the Financial Times reported that Lakshmi Mittal, founder of an Indian steel giant, was considering leaving the UK following the non-dom abolition, sparking debate as a symbolic move. On the other hand, the Tax Justice Network (TJN) has released counter-analyses stating that the "millionaire migration" is often exaggerated and represents only a small fraction of the wealthy population.Financial Times


What the Data Reveals: Concentration and Risk

  • Top 1% (about 500,000 people): £93.8bn burden (2023/24 fiscal year).

  • Among them, the top 100,000: £54.9bn, accounting for about 20% of the total alone.

  • Recent trends in disposable income and employment are also being tracked by the Office for National Statistics (ONS) through the PAYE series, but the **concentration of tax revenue "bearers"** could become vulnerable to economic fluctuations and policy changes.Scottish Financial News


Additionally, HMRC continues to increase additional tax revenue through enforcement enhancements via its data analysis platform "Connect," securing **+£4.6bn for the 2024/25 fiscal year. While the "horizontal expansion" of tax collection progresses, there are still limitations in grasping the assets of ultra-high-net-worth individuals and estimating offshore structures. In other words, the current situation demands simultaneous efforts to "fill in the gaps" and address the "relocation of bearers abroad."Financial Times


Voices from the Field: How SNS Reacted

 


  • "The top 0.1% pay more income tax than the bottom 50%. They are mobile. If you want growth, you should create an environment to retain them" (post by a conservative MP). This is a typical argument emphasizing the concentration of burden and "flight risk."X (formerly Twitter)

  • "'1% Holds a Third' is not a third of government spending. Beware of misleading information" (economist account). There is a strong voice cautioning against the misinterpretation of "what the third refers to," i.e., the misreading of the denominator.X (formerly Twitter)

  • "The 'millionaire exodus' is actually a small fraction. Look at the numbers calmly" (spread by TJN). The criticism of "headline over substance" is repeated on X and Reddit.Tax Justice Network

  • "The burden share of the top 1% and 10% is indeed large. But maintaining progressivity is also necessary" (centrist policy cluster). The call for balancing growth and fairness is prominent among the "moderate" opinions.Growth and fairness.X (formerly Twitter)


In the SNS space, the discourse can be broadly categorized into three major trends:
(1) Growth-oriented (mobility-focused): The concern that imposing excessive burdens on highly mobile high-income earners could lead to the outflow of income, investment, and employment overseas.
(2) Fairness-oriented (redistribution-focused): The argument that "who should pay how much" should be ethically and politically corrected through redistribution.
(3) Fact-checking-oriented: Cautioning against misinterpretations of the denominator (tax revenue vs. expenditure) and the simplistic equation of non-dom abolition with an immediate "mass exodus."


To Be a "Chosen UK": Policy Options

1) Stabilization and Predictability of Taxation
For high-income earners and entrepreneurs, the **"sense of predictability"** in the tax system is extremely important. Frequent changes in the system can become a constant discount factor. Large-scale changes like the recent non-dom abolition are more likely to exceed the threshold for relocation.Business Matters


2) Narrowing Down Incentives and Clarifying Returns
"Who to favor, for what purpose, and to what extent." For example, focusing on incentives linked to R&D tax credits and equity compensation for scale-up companies, and requiring disclosure of outcomes, is a reasonable approach internationally.


3) Strengthening Enforcement's "Last Mile"
While data enforcement like Connect is yielding results, there is significant room for improvement in international data collaboration and understanding the realities of ultra-high-net-worth individuals (especially offshore trusts). There is still room to increase the capture rate of taxable capacity without raising tax rates.Financial Times


4) Streamlining Messaging
"The top 1% holding a third" refers to the breakdown of tax revenue, not the ratio of spending on social security or public services. Avoiding misleading framing and carefully building a "common understanding" among all taxpayers is a prerequisite for system acceptance.X (formerly Twitter)


What to Watch Next

  • Autumn Budget (November): While increased revenue is needed, the constraint of a **"tax system that doesn't drive people away"** is growing stronger. The government is being forced to balance progressivity and growth investment.Business Matters

  • Actual Movement of the Wealthy: While individual "big-name" cases attract attention, statistical understanding of net movement is essential for policy evaluation. Caution against discrepancies between headlines and actual numbers.Financial Times

  • Evolution of Tax Enforcement: The implementation of AI×data collaboration will influence the sense of fairness in taxation. The balance between transparency and privacy will be questioned.Financial Times

Conclusion: The numbers have highlighted the structural risk of "dependence on the top 1%." As the competitive environment wavers with the non-dom abolition, can a "predictable and chosen tax system" be designed? The UK's next move will be a comprehensive battle incorporating the trends of competing locations such as European countries, UAE, Switzerland, and Italy.Business Matters


Reference Article

The top 1% of UK taxpayers bear a third of income tax and capital gains tax
Source: https://bmmagazine.co.uk/news/top-one-percent-pay-third-uk-tax-wealth-mobility-non-dom-exodus/

← Back to Article List