The top 1% of UK taxpayers contributed a third of all income tax and capital gains tax (CGT) collected in the last financial year. This is according to new HMRC data, which highlights the growing reliance on a small group of high earners to support public finances.
A freedom of information (FOI) request from investment service Wealth Club found the top 500,000 taxpayers paid £93.8 billion in 2023/24, accounting for 33% of total income and capital gains income. The top 100,000 earners alone donated almost £55 billion – almost one in five pounds raised.
According to Wealth Club, the findings highlight the financial risk of discouraging high net worth individuals (HNWIs) from living and investing in the UK.
“A very small group of individuals are responsible for a disproportionate share of the country’s tax revenue,” said Alex Davies, founder and chief executive. “Instead of discriminating against success, we should create a stable and attractive environment in which entrepreneurs and wealth creators stay, invest and contribute to the long-term success of the country.”
The figures come amid concerns that the abolition of the non-domiciled system in April will accelerate the exodus of globally mobile, wealthy individuals. The previous system allowed foreign nationals who were permanent residents abroad to pay a fixed annual fee starting at £30,000, while protecting foreign income from UK taxation.
Under the new rules, people who have been resident in the UK for four years or more will have to pay income and capital gains taxes on their worldwide income, with inheritance taxes also being levied on foreign assets over time.
Marc Acheson, global wealth specialist at Utmost Wealth Solutions, said: “Some argue that raising more taxes on the rich is a simple fiscal solution, but this overlooks how internationally mobile this group is. Behavioral changes resulting from tax reforms can significantly reduce revenues rather than increase them.”
He added that jurisdictions such as Italy, Switzerland and Portugal are “aggressively competing” to attract retiring non-doms and HNWIs.
“You cannot milk a cow that has already left the stable”
Lawyers for private clients reiterated the warning. Ceri Vokes, head of private clients and tax at Withers Europe, said many wealthy individuals, particularly business owners, had already moved following the abolition of non-dom, higher CGT rates and impending changes to inheritance tax.
“The rich already bear a disproportionate share of the UK’s tax burden. Driving them out not only loses taxpayers, but also the jobs, investment and opportunities they create,” she said. “You can’t milk a cow that has already left the barn – and yet overtaxing the rich is exactly what you want to achieve.”
Responding to the FOI findings, a Treasury spokesperson said: “The UK tax system is progressive, meaning those on higher incomes contribute more, helping to support vital public services.”
But with the top 1% now accounting for a third of all income taxes, economists warn that the government faces a delicate balancing act between protecting revenue and maintaining the UK’s international attractiveness for high earners, entrepreneurs and investors.
As the November budget approaches, policymakers will be under pressure to show that tax reforms can both raise revenue and retain the contributors on whom much of the tax base depends.
