6 August 2012
Publications that covered this story include The Daily Express, The Independent, The Mirror and The Metro, 6 August 2012.
- 7% increase in mean UK tax during recession
- Top 50 UK towns and cities ranked by highest tax
York taxpayers have seen their tax bills increase the fastest of all the top 50 towns and cities in the UK since the start of the financial crisis.*
Based on an analysis of HM Revenue & Customs (HMRC) data by UHY HY, 42 of the UK’s top 50 towns and cities saw their average tax bill rise, while 8 saw decreases between 2006/7 and 2009/10.
Taxpayers in York saw the fastest increases, paying 31% more tax in 2009/10 than in 2006/7, the year before the financial crisis, rising from a mean of £3,730 to £4,890 per annum.
Taxpayers in York are now ranked 11th out of the Top 50 UK towns and cities for tax, up from 18th before the recession.
Seven UK towns where incomes have risen while taxes have fallen
- St Albans
By comparison, the amount of tax collected from UK taxpayers as a whole has increased by just 7%, from a mean of £4,700 to £5,030 per annum over the same period.
Our research points out that the average taxpayer has seen their income rise faster (11.4%) than the amount of tax they’re paying. The mean UK income of taxpayers rose from £25,500 to £28,400 per annum over the last three years. The effective tax rate (the proportion of a person’s income taken in tax) has fallen from 18.4% to 17.7%.
While the effective tax rate has fallen, the Government is still pulling in more money overall, from tax payers, as average tax bills increase.
Taxpayers more commonly on median incomes** have found that their incomes have risen (10.4%) nearly three times faster than the amount of tax (3.4%).
York’s popular tourism industry has held up very well, and it is emerging as a centre for the technology and science sectors, industries that remained relatively insulated from the worst ravages of the financial crisis.
Our findings point out that, between 2006/7 and 2009/10, the basic personal allowance increased from £5,035 to £6,475 (28%); for pensioners aged 65-74 it increased from £7,280 to £9,490 (30%). The basic rate of tax fell from 22% to 20%.
Rob Durrant-Walker, Manager at our York office says: “For the vast majority of taxpayers the effective tax rate fell during the financial crisis. The tax bill for someone on a static income of £20,000 will have decreased by about 11% over the last three years. Of course, that doesn’t reflect the increase in VAT and other indirect taxes.”
“These statistics also show survivor bias of the recession – showing those still working, or self employed or pensioners who are earning enough to pay tax.”
The total number of taxpayers has declined from 31.8 million in 2006/7, to 30.6 million in 2009/10, many of whom have lost jobs.
Rob explains: “Unfortunately, it is possible that the increase in average income of those remaining is partly explained by the lower paid or part time jobs falling outside of the tax regime. People in York aren’t having massive pay rises.”
One of the many potential factors in differences between towns and cities may be that some have a disproportionately high concentration of public sector jobs across the working-age population.
Rob comments: “Whilst public sector workers are taking hits now in terms of widespread pay freezes and job losses, they had been largely insulated in the first part of the recession from the pay austerity, enforced shorter hours, and job losses which has depressed incomes in the private sector.
According to our analysis, residents of Winchester and Aberdeen have seen the second and third fastest increase in the amount of tax since the financial crisis.
Taxpayers in Winchester saw the amount of tax they pay jump by 21.7%, from £6,910 to £8,410 per annum. In Aberdeen, taxpayers saw the amount of tax they pay rise by 19%, from £5,060 to £6,020 per annum.
St Albans remains the town with the highest tax burden in the UK, though Winchester is catching it up. Taxpayers in St Albans paid a mean of £9,960 in tax in 2009/10 which is down from £10,500 in 2006/07, a fall of just over 5% in three years and is one of the worst performing towns.
Rob says: “St Albans has been described as the ‘epitome of middle class commuter land’, and whilst its employment rate is above average it is difficult to say if this relative income fall against the rest of the UK reflects the loss of middle class London commuter jobs, or of self employed businesses.”
* Based on an analysis of tax returns for the 2006/07 and 2009/10 tax years, most recent available.
** £17,500 in 2006/7, and £19,312 in 2009/10