More than 50,000 people at the highest income level account for 6% of all profits – 60 times their share of the population, the Institute for Fiscal Studies said in a report covering 10 years until 2019. It showed that more than half 1% of the richest adults lived in London and the South East, while almost 60% were aged between 45-64 and only one-fifth were women. The report, Top Income Inequality and Fiscal Policy, shows that gains from self-employment and business ownership were far more significant for those at the top compared to those with low and middle incomes. Pointing out that this has consequences for inequality because company-owned income is taxed at a lower rate than earnings from the job, the report argues that reforms could be launched to address the injustice in the tax system. Alex Beer, head of the Nuffield Foundation welfare program, which funded the research as part of the IFS Deaton inequality review, said: “The current design of the tax system, including the way is unfair and ineffective, punishing employees and distorting investment decisions to the detriment of social welfare. “ According to the report, business income – either from self-employment or from owning and running a company – accounts for 21% of total income for 1% of adults and 29% for 0.1% of the top, compared to with only 9% for the rest of the population in general. He said business owners could choose to effectively deduct income from their company through payroll, dividends or capital gains – allowing them to take advantage of lower tax rates. The report pointed to a 10% tax-deductible tax rate on corporate assets, saying that corporate owners could have access to tax rates of just 27% on income received in the form of capital gains. profits. By comparison, the average tax rate for employees at the top 1% is 42%. The government sets the basic income tax rate at 20% for profits above the tax-free personal allowance of £ 12,571, up to £ 50,270, with a rate of 40% on income over £ 50,271 and 45% over .000 150,000. Despite lower rates open to business owners, IFS said taxes on the highest paid employees had risen since 2010. As a result, the share of total post-tax income in the UK with higher wages fell by 14%. in 2009-10 to 11% in 2018-19. Highlighting the pay gap between the public and private sectors at higher levels, the Taxpayers’ Alliance said in a report earlier this week that only 2,921 local government employees in 2020-21 received more than 100 100,000 in total earnings and 739 received over .000 150,000, 46 more than last year. According to the Institute for Government, just 1,560 of the 456,410 civil servants earned more than .000 100,000 in 2020. Across the public service, the majority of staff (55%) were paid less than .000 30,000.
