Taxation

Taxes raised 36% of the UK's GDP in 2025-26. That's the highest since 1950, and close to the post-war peak of 37%.

At the start of the 20th century, government receipts were around 10% of GDP. They rose sharply during the two world wars, and have fluctuated between 31% and 43% since 1950.

In 2025-26, the UK raised £1.1 trillion in taxes. What were the sources of this revenue?

Three taxes raise two-thirds of the UK's tax revenue: income tax raises 30%, and both VAT and National Insurance raised around 19%.

Adjusted for inflation, tax revenue has increased by around two-thirds since 2000.

Income tax, the largest tax, now raises £329 billion a year, which is 79% more than in 2000. National Insurance has grown even faster, by 89%.

The biggest share of income tax is paid by people at high incomes. In 2024, the top 1% of income taxpayers — those with incomes over £207,000 — received 12% of income, but paid 27% of all income tax. The top 10% paid 59% of income tax.

The bottom half of taxpayers paid 10% of income tax.

Income tax is charged in bands.

In 2026, the first £12,570 of income is tax-free (the personal allowance).

Income from there up to £50,270 is taxed at the basic rate of 20%. Income above £50,270 at the higher rate of 40%. Then, income above £125,140 at the additional rate of 45%.

Each rate applies only to the part of income within its band. Scotland sets its own rates and bands.

The chart shows the number of people paying higher and additional rates of tax.

These numbers have risen quickly since the thresholds were frozen in 2021. This is often called 'fiscal drag': as wages rise and thresholds don't, more people are pulled into higher tax bands.

The chart shows the share of household income that is paid in taxes, from the poorest to richest tenth of households ranked by income. Most pay around 29% to 33%, but the poorest tenth and richest tenth pay more.

This is broken down by direct taxes (income, National Insurance, and council tax) and indirect taxes (VAT, duties and others).

Income tax takes a larger share of income from richer households. Indirect taxes such as VAT take a larger share from poorer households, because they spend more of their income.

In the map, you can see the average Band D council tax for each local authority.

The average across England was £2,392 in 2026-27, up 4.9% on the year before.

The average in Wales is £2,283, and in Scotland £1,653. Northern Ireland has domestic rates instead of council tax.

The chart shows the income tax and National Insurance an employee pays on each extra pound they earn (the marginal rate), and on all their earnings (the average rate).

In 2026-27, an employee earning £30,000 a year takes home £25,120 after income tax and National Insurance. On £50,270 they take home £39,714, and on £100,000, £68,557.

Between £100,000 and £125,140, the tax-free personal allowance is withdrawn, so the marginal rate jumps to 62% — higher than on larger incomes.

The top rate of income tax was 83% in the late 1970s, and 98% on investment income. It was cut to 60% in 1979, and to 40% in 1988. Since 2013, it has been 45%.

The basic rate has fallen from 33% to 35% in the late 1970s to 20% since 2008.

The personal allowance (the income on which no tax is paid) and the higher-rate threshold have been frozen since 2021-22, at £12,570 and £50,270.

Because prices have risen, they are now worth around 20% less in real terms. If they had risen with inflation, they would be around £16,050 and £64,200.

The chart shows rates of VAT, corporation tax, and National Insurance since the 1970s.

VAT was introduced at 10% in 1973, and has been 20% since 2011.

The main rate of corporation tax fell from 52% in the 1970s to 19% from 2017 to 2023, and has been 25% since April 2023.

The main rate of National Insurance paid by employees was 12% for most of the 2010s. It was cut to 10% in January 2024 and to 8% in April 2024.

The UK raises a similar share of its GDP in tax to the OECD average: 34% in 2024, based on the OECD's measure.

That's less than most of Western Europe — Denmark and France raise over 43% — but more than the United States (26%) or Ireland (22%).

Where do other countries collect their taxes from, and how does the UK compare?

Relative to most other countries, the UK raises more from income taxes and property taxes, and less from social security contributions (such as National Insurance).

Tax revenue figures come from the Office for Budget Responsibility (OBR), based on the national accounts. They count all taxes and National Insurance paid to central and local government. They differ slightly from HMRC's figures, which leave out some taxes, such as council tax and business rates.

Who pays tax comes from HMRC's statistics on income tax, based on a survey of tax records, and from ONS's estimates of the taxes paid by households, which include indirect taxes.

Tax rates come from HMRC and HM Treasury. The tax rates by earnings chart is our own calculation from the published rules.

International comparisons use the OECD's Revenue Statistics, which measure all countries' taxes the same way.

Most figures are for financial or tax years, shown by the year they end.