The income tax burden on London and the South-East has exceeded £100 billion annually for the first time, according to official statistics. Londoners contributed £59.3 billion to the Treasury in a single year, while South-East residents contributed £41.4 billion, accounting for more than half of the £198 billion collected in England. The Chancellor’s stealth tax freeze on income tax thresholds is the primary driver of this increase. By 2027/28, an estimated one million people in London and the South-East will be subject to the higher rate of income tax due to this policy, according to data from the House of Commons Library. Twenty of the 25 parliamentary constituencies with the highest income tax contributions are located in London, including Kensington, which alone contributed £3.37 billion, slightly less than the entire contribution from Northern Ireland (£3.44 billion). The Cities of London and Westminster came in second with £3.15 billion, followed by Hampstead and Kilburn (£3.06 billion), Chelsea and Fulham (£2.87 billion), Richmond Park (£1.95 billion), Westminster North (£1.87 billion), and Battersea (£1.68 billion). In London’s commuter belt, Esher and Walton ranked seventh among the top 25 with a contribution of £1.72 billion, while Beaconsfield contributed £1.06 billion, Hitchin and Harpenden £1.02 billion, and Chancellor Jeremy Hunt’s current constituency of South West Surrey contributed just under £1 billion. These latest figures, released by HM Revenue and Custom, cover the period 2021/22, which represents the first year of the Chancellor’s freeze on income tax and National Insurance thresholds, indicating that the totals have likely increased since then. The data also demonstrates that Londoners, on average, pay more income tax than individuals in any other region of the country. The median income tax paid in London, which represents the middle value if all taxpayers were listed in ascending order, is £3,650 annually. This calculation method ensures that the extremely wealthy do not significantly inflate the average figure for the capital. Nevertheless, London taxpayers still pay at least £600 more on average than those in the next highest-paying region, the South-East, where the median is £3,010. The figures for other regions are as follows: East of England (£2,790), South-West (£2,470), East Midlands (£2,370), North-West (£2,360), West Midlands (£2,340), Yorkshire and the Humber (£2,300), North East (£2,230), Scotland (£2,560), and Wales (£2,280). Sir Ed Davey, the Liberal Democrat Leader and MP for Kingston and Surbiton, stated, “The hard-working middle class has already faced the steepest decline in living standards on record, yet Jeremy Hunt is compounding their misery with his freeze on income tax thresholds. Every month, families look at their paychecks and feel short-changed…this Conservative government is taking voters across London and the South East for granted.” The income tax burden on London has risen steadily, with £51.6 billion collected in 2020/21 and £36 billion in the wider South East, totaling £87.6 billion. Therefore, the Treasury’s revenue from these two regions increased by £13.1 billion to £100.7 billion in 2021/22, a rise of almost 15%. This growth surpassed the £4.5 billion increase experienced by the two regions between 2019/20 and 2020/21, when the combined revenue rose from £83.1 billion to £87.6 billion (London: £48.3 billion; South East: £34.8 billion). The increases have followed a similar pattern in previous years for the two regions, with a combined figure of £82.4 billion in 2018/19, £79 billion in 2017/18, and £76.6 billion in 2016/17. A Treasury spokeswoman remarked, “After providing hundreds of billions of pounds to protect lives and livelihoods throughout the pandemic and Putin’s energy shock, we had to make some difficult decisions to help pay it back. Our tax system is progressive, which means that over half of all income tax is paid by the top five percent of earners. Now that the economy is turning a corner, we have cut National Insurance by a third.” In March, Mr. Hunt reduced National Insurance by 2p in the Budget, following a similar reduction in the Autumn Statement last year. When combined with the stealth tax threshold freezes, the disposable income of London households is projected to increase by an average of £110 in 2024/25, the largest increase among all regions. However, this will be followed by a decrease of £10 in the capital in the following year, £110 in 2026/27, and £230 in 2027/28, as the impact of the Chancellor’s stealth taxes intensifies, according to figures from the Commons Library.
London and South-East Hit by £100 Billion Income Tax Grab
