How does the UK raise its taxes? How does the UK spend its tax revenue? Which taxes raise the most revenue?

HM Treasury has opened a portal for Budget representations ahead of Budget 2021 and we thought that this summary might provide some 'food for thought'.

Tax yield by tax

This table has been compiled from data supplied by HMRC and Office of National Statistics. 

Financial Year

2019-20

£m

%

2018-19

£m

%
Income Tax (IT)   193,243 28.9%   191,031 29.2%
PAYE Income Tax (included in IT)   164,841     161,909  
SA Income Tax (included in IT)     32,185       31,518  
National Insurance Contributions 142,871 21.4% 136,646 20.9%
Capital Gains Tax       9,826 1.5%       9,197 1.4%
Apprenticeship Levy       2,798 0.4%       2,713 0.4%
Value Added Tax   129,885 19.4%   132,177 20.2%
Corporation Tax (CT)     61,106 9.1%     54,272 8.3%
Offshore (included in CT)      1,274        1,912  
Bank Levy       2,472 0.4%       2,565 0.4%
Bank Surcharge       1,978 0.3%       1,904 0.3%
Diverted Profits Tax              5 0.0%            12 0.0%
Petroleum Revenue Tax -        408 -0.1% -        744 -0.1%
Hydrocarbon Oil (Fuel duties)     27,573 4.1%     27,993 4.3%
Inheritance Tax       5,122 0.8%       5,359 0.8%
Stamp Duty Shares       3,619 0.5%       3,620 0.6%
Stamp Duty Land Tax     11,601 1.7%     11,942 1.8%
Annual Tax on Enveloped Dwellings          128 0.0%          139 0.0%
Tobacco duties       8,804 1.3%       9,290 1.4%
Spirits duties       3,825 0.6%       3,779 0.6%
Beer duties       3,446 0.5%       3,661 0.6%
Wines duties       4,296 0.6%       4,392 0.7%
Cider duties          270 0.0%          279 0.0%
Betting & Gaming       3,019 0.5%       2,985 0.5%
Air Passenger Duty       3,641 0.5%       3,636 0.6%
Insurance Premium Tax       6,415 1.0%       6,197 0.9%
Landfill Tax          641 0.1%          683 0.1%
Climate Change Levy       2,004 0.3%       1,922 0.3%
Aggregates Levy          397 0.1%          367 0.1%
Soft Drinks Industry Levy          337 0.1%          240 0.0%
Swiss Capital Tax              - 0.0% -           1 0.0%
Customs Duties       3,287 0.5%       3,356 0.5%
Penalties          641 0.1%          720 0.1%

Collected by HMRC

 

632,842

 

 

620,330

 

 
Council tax     36,241 5.4%     34,831 5.3%
Business rates *  ?  ?
Total taxes   669,083 100%   655,163 100%

 

*Business rates gross about £24,000m. These are only paid by businesses with business premises that do not currently qualify for small business rate relief and therefore if included in the above totals, they would account for roughly 3.5% of tax revenue. At Spring Statement 2018 the Chancellor announced that the next revaluation would be brought forward by one year to 2021, 4 years after the last revaluation. Valuation is proposed to be based on market rental values at 1 April 2019. 

How taxes are spent

How are our taxes spent by government?

This summary is compiled from the data provided to taxpayers in their individual tax accounts by HMRC. It shows the expenditure as a percentage of taxes collected by HMRC.

A summary of taxes collected by HMRC is on the previous tab.

This is for the years before the UK felt the full effects of the Coronavirus pandemic.

 2019-202018-192017-182016-17
Description%%%%
Welfare  22.1 23.5 23.8 24.3
Health  20.5 20.2 19.9 20.3
State Pensions  12.4 12.8 12.8 12.9
Education  11.6 11.8 12 12.3
Defence  5.3 5.3 5.3 5.2
National Debt Interest  6.9 5.1 6.1 5.5
Transport  4.3 4.3 4.3 4.2
Public Order and Safety  4.3 4.3 4.3 4.2
Business and Industry  3.8 3.6 2.9 2.5
Government Administration  2.1 2.1 2.1 2.1
Housing and Utilities, like street lighting 1.8 1.6 1.6 1.5
Environment  1.5 1.5 1.6 1.6
Culture, like sports, libraries, museums  1.5 1.5 1.6 1.6
Overseas Aid  1.1 1.2 1.2 1.1
UK Contribution to the EU Budget  .8 1 .7 .7
Total* 100 100 100 100
Council expenditure out of council tax **        
Council expenditure out of business rates ***        

 

* rounding means that these are not 100%

**Council tax is not collected by HMRC and so it does not analyse how it is spent.  A summary is supplied by your local council.

***Business rates are not collected by HMRC but are redistributed to councils.

Sources

By way of a simplistic explanation of the figures and data sources:

  • The Office of National Statistics (ONS) is in charge of collecting and analysing data on the UK's public finances.
  • HM Revenue & Customs (HMRC) provides its own data on the taxes it administers and collects to the ONS and it also publishes it in limited form for taxpayers.
  • The Office of Budget Responsibility (OBR) analyses the data to check that the government is on track with its promises, and chancellor uses the OBR data in setting the Budget.

HMRC tax receipts and NICs

OBR Pubic Finances data banks

Taxpayer business account summary (login in to your account)

 

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