How a Negative Income Tax could more effectively deliver a Basic Income

Using a Negative Income Tax mechanism to deliver A Basic Income could decrease the tax burden, especially on those who work for a living.


The assumption of much of the discussion around Basic Income/Citizens Income is that it will require a huge increase in taxation. This is not an unreasonable assumption given that most Basic Income models argue for a significant cash sum to be provided to every adult citizen on top of all other public expenditure.

Some (such as the RSA’s Anthony Painter) have already countered this argument effectively by pointing out that the current benefits bill, plus the cost of tax allowances, already provides sufficient funding to provide a modest basic income to all citizens.

Below, I put forward the argument that by delivering the basic income via the tax system (i.e. as a negative income tax), the tax burden could be not just be kept stable, but in fact lowered.

Negative Income Tax

To start with, I will explain what I mean by a negative income tax. The idea has been floated before by Milton Friedman, among others, and is essentially a payment by government to people who earn below a given threshold. Much in the same way that government will take payment from your income above a certain level, with a negative income tax it will actually pay you money instead if your income is deemed sufficiently low.

I do not plan to get sucked into arguments about various models of negative income tax, but will simply set out my own simple plan below.

Current Income Tax Revenue and Benefits Spend

As luck would have it, the current tax revenue from personal income is broadly similar to the money spent on cash transfers to the less well off (i.e. ‘Benefits’)

Tax Revenue* Welfare Payments** Cost
Income tax £168bn Benefit Spending £224bn
Employees NI £50bn (Social Care) (£34bn)
Capital Gains Tax £7bn
Inheritance Tax £4.6bn
Shares/dividends tax £3.3bn
Total Revenue £232.9bn Total Benefits £224bn
*Source – HMRC Tax and NI Receipts 2016
** Source – ONS (2015). The site also gives an interesting breakdown of where that money is spent if you’re interested. For the purposes of this proposal, I will exclude social care costs, for which I do not plan any changes, and simply include transfer payments to individuals (i.e. ‘benefits’)

This means that, in effect, pretty much all tax on personal income is spent on transfer payments to other citizens/residents, give or take £9bn. Please keep this in your head for comparisons later on.

The Citizens Income delivered via a Negative Income Tax

For arguments sake (or perhaps more honestly, for the sake of demonstrating what is possible within this model), we are going to award a Basic/Citizens Income of the following amounts

  • £8,400 per year to every person over 65 years of age
  • £6,000 per year to every person between 21 and 64 years of age
  • £3,600 per year to every person between 18 and 20 years of age
  • £2,400 per year to every person between the ages of 0 and 17 (for 16 and 17 year olds, the payment will be made directly to the recipient. For those 0-15, payment will be made to the named guardian/primary carer)

However, unlike many other Basic/Citizens Income models, instead of handing over a lump sum payment to each person, we will offset it against their tax liabilities in the following way:

  • Each person can earn up to £24,000 per year tax-free across all forms of income (i.e. from work, savings, investments, inheritance, gambling etc. All other taxes relating to personal income will be abolished).
  • For every £1 they earn over that, they will be taxed 35p (or 35%)
  • For every £1 they earn under that they will receive a negative income tax payment of the following amounts:
    • 35p/35% for those aged over 65
    • 25p/25% for those aged between 21 and 64
    • 15p/15% for those aged between 18 and 20
    • 10p/10% for those aged 17 and under

So, if somebody earns £34,000, they are £10,000 over the threshold and so will pay tax of 35% on that – i.e. £3500 – and,therefore, have a take-home pay of £30,500.

Similarly, if somebody (aged 21-64) earns £14,000, they are £10,000 under the threshold and will therefore be paid 25% of that (£2,500) by the government, making their take-home pay £16,500.

This has the same effect as paying the above lump sums (Basic/Citizens income) to individuals and then taxing their income above that at a rate of 10%/15%/25%/35%. The rate of tax could be altered of course, but I have kept it flat above earnings of £24k because a) it’s simpler and b) the presence of the negative income tax makes the system extremely progressive, so further tinkering with rates in an attempt to make it fairer are entirely unnecessary. (see figure 1 in the Appendix below)

The Cost/Revenue of a Negative Income Tax

So how much will this proposal cost?

I have used the Office of National Statistics breakdown of personal income at each percentile in order to measure and demonstrate the effect of this tax system (See table 1 in Appendix).

It looks at all income which is potentially liable for tax, so this would include traditional income from work as well as all other sources such as capital gains, savings interest, inheritance etc. It also excludes those people who have no income of their own (around 10 million adults in the UK). This means that approximately 42 million people are represented in this table, and 420,000 in each percentile.

The numbers are only available up to 2014, so I have assumed (conservatively) a 4% rise in that income between 2014 and 2016. This is purely to allow us to compare with the 2016 tax revenues listed above.

I attach the full table below (see Appendix) but for those without the stomach for 600 cells of data, I summarise below, and add other considerations beyond the simple stats shown..

    • The cost of paying a Negative Income Tax of £6,000 to those adults without any income (10 million people) is £60 billion (1).
    • The cost of paying it to the 12 million children in the UK is £28.8bn
    • The cost of paying it to all other adults who have an income between £1 and £24,000 is another £38.2 billion (2)
    • The extra cost of paying a higher rate of Negative Income tax to Pensioners is approximately £8.75bn (3)
    • The cost of payments to pensioners residing outside the UK is £2.5bn (4)
    • The saving made from paying 16-20 year olds a lower rate is approximately £9.75bn (5)
    • The tax collected from all those who earn over £24,000 is £140 billion.
      • But, the cost of permitting tax deductions for charitable contributions will be £3.3bn (6)
  • So, in summary:
    • Negative Income Tax paid out is £128.5bn
    • Positive Income Tax collected is £136.7bn
(1)The criteria for receiving the Negative Income Tax is that the person is a citizen of the UK, and resident in the UK.
(2)This is calculated for UK citizens only. So, the 4 million non-citizens who live in the UK can still earn up to £24,000 per year tax free, but will not receive negative income tax. Above £24,000 they will pay the same rate of tax (35%) as UK citizens. I have assumed that non-citizens are represented equally in each percentile (i.e. 40,000 in each percentile not receiving Negative Income Tax, but paying 35% tax on income over £24,000)
(3)This assumes that the average pensioner earns £17,000 from private (non-state pension) sources. At the higher rate of negative income tax of 35%, this means the average pensioner would be receiving £2,450, rather than £1,750, or an extra £700 each. Multiplied by £12.5m pensioners in the UK, gives us an increase of £8.75bn overall. If every pensioner receive the full £2k then the cost would be £25bn, but the vast majority of pensioners do have other personal incomes so this is in fact much lower
(4)Those 900,000 UK citizens aged over 65 and living abroad will receive the payment, but will have to provide proof of income. I have assumed the same income distribution as the ONS figures for those residing in the UK
(5) Assuming the 3.75m people in this age category earn an average of £12k (many will earn much less or nothing at all), which means that at the lower rate they will be paid on average £1,800 each, instead of £4,200. A saving of £2,600 per person, or £9.75bn in total.
(6) Average charitable donations in the UK are approximately £11bn per year (old figures admittedly), which given our average tax rate of around 30%, would reduce the tax take by around £3.3bn. No other deductions will be permitted.

So, using this approach, the amount of tax levied on income is just £136.7bn, compared with £233bn under the current system.

Similarly, the amount of transfer payments/benefits paid out is £128.5bn, compared with the current bill of £224bn.

Income tax receipts would be around £8.2bn greater that ‘benefits’ paid out – very similar to the £9bn differential that exists now.

However, this is assuming a pure model where all previous transfer payments/benefits are replaced by one single basic/citizens income payment.

In reality, some other specific top-up payments will still be required to support those who cannot earn more than the Negative Income Tax would provide, or who cannot reasonably be expected to adapt to the new approach.

Therefore, I would also suggest retaining the following existing benefits:

  1. Housing Benefit for those over 65 (approx £5.4bn)
  2. Half of Disability Benefit (approx £8bn). This needs greater detail, but I have assumed that the Negative Income tax will increase the incomes of many poor disabled by more than the current value of DLA/PIP payments. Nonetheless, some resource will still be needed to support disabled people who will meet extra expense
  3. Lone Parent ‘top-up’ payments of £4,000 per lone parent household, of which half would probably have to be met by the state, the other half by the absent parent. (£3.6bn)
  4. Attendance Allowance in full (£6.1bn)

The total costs for these retained benefits would be £23bn

My own preference for meeting this extra cost would be to raise the funds from a Land Value Tax (this is a whole other topic, but a shift in taxation from personal income to Land would be beneficial in other respects, not least the increased ability to raise revenue).

However, even if we loaded this extra £23bn on to Income Tax, the total Income Tax burden would still only be £159.7bn, a mighty £73bn less than the current level of tax on personal income

Similarly, if we add the £23bn cost of retained benefits to the cost of the Negative Income Tax (£128.5bn) that gives us a ‘benefits’ bill of just £151.5bn, a whopping £73bn less than the current benefits spending level.

So, when viewed against the current levels of income tax and benefits expenditure, a Basic/Citizens Income scheme administered via a Negative Income Tax would REDUCE both taxes on personal income, and state expenditure on welfare.

There are 3 main reasons for this

1.The tax-free allowance of £24,000 would remove about half of all income earners from income tax altogether, allowing low earning people to keep more of their own money >> 2. This in turn would hugely reduce the need for welfare/top-up payments >> 3. Which also then requires lower taxes to be levied to fund these payments.

It is a peculiar feature of the current tax and benefits system that we tax people on low incomes, so that they are reduced to poverty, and then we make them claim some or all of that money back through a complex series of benefit applications. We then claim that we have ‘lifted them out of poverty!’

Negative Income Tax payments would act as an income top-up to the bottom two-thirds, and the higher threshold would increase the take home pay of all income earners, thus providing a benefit to all, and not just the lower paid.

Are there any losers?

What table 1 doesn’t show is those who would lose out. These fall into two main categories:

  1. Those who receive exceptionally high levels of benefits under the current system – i.e. a household that receives well over £20,000 in benefits. Even at its peak, this was only around 0.1% of UK households, so even if every one of these households continued to be subsidised at that level, the cost would only be an extra £300m approximately. My view is that the system should be seen to be fair, so even this tiny number of exceptions might corrode support for it. However, exceptional cases should always be considered on their individual merits, so some contingency should be made for this eventuality. Under this Negative Income Tax model, a household of 2 working age adults and 2 children would have a minimum disposable income of £16,800; for a lone parent with 1 child it would be £12,400. They would both be able to claim further benefits for disability, but this would still leave their minimum income between £15,000 and £22,000 at most. The days of headlines exclaiming families living expensive lifestyles on the back of benefits payments would be over.
  2. Tax avoiders. There has been much heat generated around this topic in recent years, but the fact is that most taxpayers avoid tax in some ways, be it with tax-free savings, untaxed profit from house sales or other tax free allowances. With the Negative Income Tax, most of these allowances and avoidance loopholes would be closed. The £24,000 tax free limit is very generous by current income tax standards, but not as generous as some loopholes (£300,000 for inheritance income for example). Also, self-employed people who pay themselves with share dividends or capital gains, rather than salaries, in order to pay a lower level of tax, would find themselves now paying the same tax either way. This is only fair. Equal treatment across all people and all forms of personal income is a stance that is easily defended, but those who profit from the current unequal arrangements might not feel so supportive of the change.

Advantages of the Negative Income Tax approach

The Negative Income Tax has all the advantages over the current Tax and Benefits setup that most Basic/Citizens Income proposals have. I don’t plan to go into them all here, but here’s a brief recap:

  • There is no disincentive for those who are out of work to gain employment. There is no additional loss of benefits to bear when income rises. All citizens (within the same age group) face the same effective tax rate on extra income, whether they are working or not.
  • Labour Market Flexibility. People are automatically supported when they are between jobs, without having to fill in forms, meet complex criteria or justify their personal decisions.
  • Simplicity of administration. There is one rule applied to everyone that is easy to understand and administer
  • The system can’t be ‘gamed’ or manipulated by those who understand it better and exploit it. This is another advantage of its simplicity.
  • Everyone benefits. All citizens receive the basic income/negative tax. Every single citizen is supported for their entire life, no matter what. Nobody falls through the gaps in the system
  • It will virtually eradicate real poverty. This is a big topic that one bullet point can’t cover completely, but the minimum household incomes outlined above would be sufficient to ensure that no households would fall below 80% of the poverty level. For citizens, the absolute destitution currently experienced by 1.2 million people each year (an utterly shameful statistic for a developed country in 2016) would be a thing of the past. All those people who currently find themselves falling between the gaps in the current welfare safety net will be caught by a Negative Income Tax.

However, the Negative Income Tax has other advantages over most Basic/Citizens Income proposals

  • It does not require any additional administration/bureaucracy. It makes use of infrastructure that is already in place (i.e. income tax collection, tax rebates, child benefits). If anything, the approach outlined above is much simpler than existing income tax arrangements so could potentially allow for efficiency savings.
  • The rewards to all levels of income earners is clear. People are already used to calculating their disposable income after tax so will be able to see more easily how a Negative Income Tax could benefit them.
  • It doesn’t need to be presented as ‘money for nothing’ as Basic/Citizens Income often is, but can be presented as a much fairer and more efficient tax system.
  • It permits the case that a Basic/Citizens Income would allow us to reduce taxation and spending. Never underestimate the power of this argument to those who are suspicious of endless government expansion, interference and bureaucracy.

A Negative Income Tax gives proponents of a Basic/Citizens Income an opportunity to gain support from an audience that thus far has proven to be the most hostile to the idea, thus broadening its appeal and making its future adoption much more likely.


Table 1: How the Negative Income Tax impacts each percentile of income earners.(Source: ONS Income Percentiles 2014)

Personal Income Amounts: £
Percentile point

2013-14 Income (£)

2016 Income (£) Tax paid (£) Income After tax (£) % income paid as tax Tax Collected (£bn) Total tax collected (£bn)
Non-earners 0 0 0 0 -100.0 -60.00
1 9,710 10,098 -3475.4 13,574 -34.4 -1.32
2 10,000 10,400 -3400 13,800 -32.7 -1.29
3 10,300 10,712 -3322 14,034 -31.0 -1.26
4 10,600 11,024 -3244 14,268 -29.4 -1.23
5 10,800 11,232 -3192 14,424 -28.4 -1.21
6 11,000 11,440 -3140 14,580 -27.4 -1.19
7 11,200 11,648 -3088 14,736 -26.5 -1.17
8 11,400 11,856 -3036 14,892 -25.6 -1.15
9 11,600 12,064 -2984 15,048 -24.7 -1.13
10 11,800 12,272 -2932 15,204 -23.9 -1.11
11 12,000 12,480 -2880 15,360 -23.1 -1.09
12 12,200 12,688 -2828 15,516 -22.3 -1.07
13 12,400 12,896 -2776 15,672 -21.5 -1.05
14 12,600 13,104 -2724 15,828 -20.8 -1.04
15 12,800 13,312 -2672 15,984 -20.1 -1.02
16 13,000 13,520 -2620 16,140 -19.4 -1.00
17 13,200 13,728 -2568 16,296 -18.7 -0.98
18 13,400 13,936 -2516 16,452 -18.1 -0.96
19 13,600 14,144 -2464 16,608 -17.4 -0.94
20 13,900 14,456 -2386 16,842 -16.5 -0.91
21 14,100 14,664 -2334 16,998 -15.9 -0.89
22 14,300 14,872 -2282 17,154 -15.3 -0.87
23 14,500 15,080 -2230 17,310 -14.8 -0.85
24 14,800 15,392 -2152 17,544 -14.0 -0.82
25 15,000 15,600 -2100 17,700 -13.5 -0.80
26 15,200 15,808 -2048 17,856 -13.0 -0.78
27 15,500 16,120 -1970 18,090 -12.2 -0.75
28 15,700 16,328 -1918 18,246 -11.7 -0.73
29 15,900 16,536 -1866 18,402 -11.3 -0.71
30 16,200 16,848 -1788 18,636 -10.6 -0.68
31 16,400 17,056 -1736 18,792 -10.2 -0.66
32 16,700 17,368 -1658 19,026 -9.5 -0.63
33 16,900 17,576 -1606 19,182 -9.1 -0.61
34 17,200 17,888 -1528 19,416 -8.5 -0.58
35 17,400 18,096 -1476 19,572 -8.2 -0.56
36 17,700 18,408 -1398 19,806 -7.6 -0.53
37 18,000 18,720 -1320 20,040 -7.1 -0.50
38 18,200 18,928 -1268 20,196 -6.7 -0.48
39 18,500 19,240 -1190 20,430 -6.2 -0.45
40 18,800 19,552 -1112 20,664 -5.7 -0.42
41 19,100 19,864 -1034 20,898 -5.2 -0.39
42 19,300 20,072 -982 21,054 -4.9 -0.37
43 19,600 20,384 -904 21,288 -4.4 -0.34
44 19,900 20,696 -826 21,522 -4.0 -0.31
45 20,200 21,008 -748 21,756 -3.6 -0.28
46 20,600 21,424 -644 22,068 -3.0 -0.24
47 20,900 21,736 -566 22,302 -2.6 -0.22
48 21,200 22,048 -488 22,536 -2.2 -0.19
49 21,500 22,360 -410 22,770 -1.8 -0.16
50 21,900 22,776 -306 23,082 -1.3 -0.12
51 22,200 23,088 -228 23,316 -1.0 -0.10
52 22,500 23,400 -150 23,550 -0.6 -0.06
53 22,900 23,816 -46 23,862 -0.2 -0.02 -98.23
54 23,200 24,128 44.8 24,083 0.2 0.02
55 23,600 24,544 190.4 24,354 0.8 0.08
56 24,000 24,960 336 24,624 1.3 0.14
57 24,400 25,376 481.6 24,894 1.9 0.20
58 24,800 25,792 627.2 25,165 2.4 0.26
59 25,200 26,208 772.8 25,435 2.9 0.32
60 25,600 26,624 918.4 25,706 3.4 0.39
61 26,100 27,144 1100.4 26,044 4.1 0.46
62 26,500 27,560 1246 26,314 4.5 0.52
63 27,000 28,080 1428 26,652 5.1 0.60
64 27,500 28,600 1610 26,990 5.6 0.68
65 27,900 29,016 1755.6 27,260 6.1 0.74
66 28,400 29,536 1937.6 27,598 6.6 0.81
67 29,000 30,160 2156 28,004 7.1 0.91
68 29,500 30,680 2338 28,342 7.6 0.98
69 30,000 31,200 2520 28,680 8.1 1.06
70 30,600 31,824 2738.4 29,086 8.6 1.15
71 31,200 32,448 2956.8 29,491 9.1 1.24
72 31,900 33,176 3211.6 29,964 9.7 1.35
73 32,500 33,800 3430 30,370 10.1 1.44
74 33,200 34,528 3684.8 30,843 10.7 1.55
75 33,900 35,256 3939.6 31,316 11.2 1.65
76 34,600 35,984 4194.4 31,790 11.7 1.76
77 35,300 36,712 4449.2 32,263 12.1 1.87
78 36,100 37,544 4740.4 32,804 12.6 1.99
79 37,000 38,480 5068 33,412 13.2 2.13
80 37,900 39,416 5395.6 34,020 13.7 2.27
81 38,800 40,352 5723.2 34,629 14.2 2.40
82 39,800 41,392 6087.2 35,305 14.7 2.56
83 40,700 42,328 6414.8 35,913 15.2 2.69
84 41,500 43,160 6706 36,454 15.5 2.82
85 42,500 44,200 7070 37,130 16.0 2.97
86 43,800 45,552 7543.2 38,009 16.6 3.17
87 45,200 47,008 8052.8 38,955 17.1 3.38
88 46,700 48,568 8598.8 39,969 17.7 3.61
89 48,500 50,440 9254 41,186 18.3 3.89
90 50,600 52,624 10018.4 42,606 19.0 4.21
91 53,100 55,224 10928.4 44,296 19.8 4.59
92 56,000 58,240 11984 46,256 20.6 5.03
93 59,700 62,088 13330.8 48,757 21.5 5.60
94 64,400 66,976 15041.6 51,934 22.5 6.32
95 70,400 73,216 17225.6 55,990 23.5 7.23
96 78,800 81,952 20283.2 61,669 24.8 8.52
97 91,300 94,952 24833.2 70,119 26.2 10.43
98 110,000 114,400 31640 82,760 27.7 13.29
99 159,000 165,360 49476 115,884 29.9 20.78 140
Total UK personal income (£bn) 1,229,160

Figure 1: Distribution of Income Tax under the Negative Income Tax model (among income earners – does not include those who have zero earnings and for whom Negative Income Tax makes up 100% of their income)


It doesn’t get much more progressive than that!



I am well aware that many of the calculations above are ‘back of the envelope’, but I have tried to use up-to-date official figures, and where estimates were necessary I have tried to be conservative in my numbers. However, undoubtedly these numbers could do with a more serious, in-depth examination, but I will stand by them until someone else can provide a more reliable analysis. I’m happy to be challenged on them, but would take the challenge more seriously if it came with the relevant data.


9 Comments Add yours

  1. Jamie says:

    Hi there,

    I like your idea but your costings are not right. The HMRC table for percentile groups represents Income Tax payers only which is 30.3 million, not 42 million, so your total taxable income is significantly lower then you have calculated. I would like this system to work, but, unless I am mistaken, it looks like it would cost significantly more than first thought.


  2. jamielmedgar says:

    Hi there,

    I like your idea and I hate to be negative but the costings are way off. The HMRC table on percentage points of pre-tax income is based on tax-payers only, not those with income (ie it doesn’t include info on those with income below the personal allowance). There are only about 30 million income tax payers and not 42 million as you said, so your base is significantly smaller then first thought. Also it doesn’t include capital gains or inheritance as these are not treated as income.


    1. martinfarley says:

      You make a fair point – there are an extra 12 million people who earn money from sources other than work (there are also around 8 million who earn nothing and 4 million who earn below the Income tax threshold). This equates to around 54 million adults, which when added to the 12 million children gives us our total UK population of 66 millioin.

      There is no data (that I can find) for these 12 million people, so I have assumed that their earnings and income distribution (per person) are the same as those who do work. This brings total personal earnings (from work and non-work) to about £1,200 billion, which broadly correlates to other figures I have seen. If there is other data that disproves this, I’m happy to use that instead.

      It does not include income from capital gains or inheritance or gambling etc, so my estimates of income (and therefore potential tax raised) are actually more modest than the reality, in my opinion.

      I hope that makes sense

      Liked by 1 person

  3. jamielmedgar says:

    Hi Martin,

    Thanks for the response. I’m not sure if you can assume that they do earn the same as those paying income tax, or would they not be paying income tax? Those 30 million tax payers are not just paying income tax on wages/salary/self-employment, but also interest, dividends etc. Most of that 12 million is made up of the unemployed, non-working mothers/fathers/wives/husbands/partners, and pensioners who are just earning the state pension which will be below the PA. Very few will be just be accumulating on capital gains.

    I have also seen some figures that support 1.2-1.3 trillion household income, however they have never come with the proper support for how this was worked out. I would be grateful, if you are able, to share any places you have seen those figures. Like I said, I would want it to be as you said, but I’m worried that its not economically viable.


  4. jamielmedgar says:

    HI Martin,

    With your negative income proposal, would pensioners not be hit quite hard? Currently if a pensioner gets the new full state pension and earns £10,000, their take-home pay would be £16,936.80 pa. But under the system above that would be £14,900 pa, 2k less. I use those figures as £18,000 is the average pensioner income. Am I missing something, or is this indeed the case?

    Thanks again


    1. Martin Farley says:

      No, it isn’t. The 30 million are workers paying income tax on their income, but the other groups you mention are part of the 12 million or so who have no income or less than the threshold. The remaining 12 are pensioners and others who earn income from investments etc (above their state pension). It is these 12 million who I’ve made equal assumptions for.

      I’m happy to amend those assumptions if you can find data for the incomes of those people.

      As I said, my assumptions on personal income bring it to a total of £1,200 billion, which seems about right (the remaining £700bn of national income is corporate profits of £400bn, rents of £200bn and non-taxable benefits of around £100bn). I concede it’s not a perfect calculation, but it seems a reasonable one to me.


      1. martinfarley says:

        Your pensioner point is a fair one, and they would need to be treated separately in this plan.

        The easiest way would be to retain their lower rates of overall income tax (at the moment they don’t pay national insurance, so their effective rates of income tax are 20%/40%/45%, instead of the standard 32%/42%/47%.

        I reckon this would reduce tax revenues by about £12bn and is one area where I need to update the plan 🙂


    2. martinfarley says:

      Jamie, my replying seems to be appearing in the wrong places, but hopefully you can follow them.

      The £1,200bn figure can be gleaned form this report, which takes its numbers from the Blue Book

      If you add their calculation of wages, plus taxable benefits it comes to around £1,200bn

      I’ve also tried to add it all up separately,which brings it in at just under £1200bn (various sources, but mostly ONS stats)
      Wages – £750bn
      Other employee benefits (like pension contribtuions) – £160bn
      Capital Gains – £37bn (thought this is only gains eligible for taxation, which is anything over £11k)
      Dividends – c£90bn
      State Pension – £90bn
      Interest – £8bn
      Inheritance – £30bn-£80bn (I can’t find any reliable sources for this, so have picked a middle number from various articles)


  5. jamielmedgar says:

    Hi Martin, thanks for the replies, I am getting them now. The 30 million tax payers from the HMRC table above does include pensioners who earn above the personal allowance as they would then be taxpayers. It also includes income from dividends, interest etc – is this not investment income?

    Also, if your system is replacing the state pension and most other taxable benefits – then these can’t be included in your household income as they won’t be paid to households anymore.

    I will do a bit digging and see if I can be more positive.


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