Income gaps lowest since 1986

Inequality of disposable income fell to lowest level since 1986 in 2011/12, according to new figures released by the Office of National Statistics.

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Poorest and richest households 'pay the same tax'

New figures reveal that overall the poorest and richest households are paying a very similar proportion of their income in taxes, 36.6 and 35.5 percent respectively.

The ONS says indirect taxes act to increase inequality of income. Credit: Office for National Statistics

According to the Office for National Statistics, the bottom fifth of households paid an equivalent of 26% of their gross income in indirect taxes on expenditure (such as VAT and fuel duty), while the top fifth only paid 11%.

After indirect taxes, the richest fifth had post-tax household incomes that were over six times those of the poorest fifth (£52,100 compared with £8,100 per year, respectively).

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Households paid 20% of income on direct taxes in 2011/2012

The Office for National Statistics has released new figures looking at the effects of taxes and benefits on household incomes in 2011/12.

  • Disposable incomes have fallen since the start of the economic downturn, with average equivalised income falling by £1,200.
  • Average original income (before any taxes or benefits) was £31,500.
  • On average, households paid 20% of their gross income in direct taxes such as income tax and council tax.
  • The top fifth of households had an average income of £78,300, 14 times that of the bottom fifth, who had an average of £5,400.

Income inequality fell to lowest level since 1986 in 2011/12

Inequality of disposable income fell to lowest level since 1986 in 2011/12, according to new figures released by the Office of National Statistics.

There was a fall in income inequality between 2010/11 and 2011/12.

This was partly driven by earnings falling for higher income households and by changes in taxes and benefits.

These changes include an increase in the income tax personal allowance and changes to National Insurance Contributions and Child Tax Credits.

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