UK taxes compared Main tax revenues

The chart below shows how much revenue the three main taxes - income tax, National Insurance and VAT - have generated for the government since 1980. 
Top three taxes graphic

Income tax

Income tax is by far the biggest revenue generator, generating £152bn last year. It is paid by around 30 million people- of whom 24.8 million are basic-rate taxpayers and 4 million are higher rate taxpayers.

The basic rate of income tax is currently 20%. This starts to be paid once your income exceeds your tax-free personal allowance. Income above a certain threshold is taxed at the higher rate of 40%. In 2013-14 this is £32,010 above your personal allowance, in 2014-14 it is £31,865 above your personal allowance. 

On income above £150,000 an additional income tax rate of 45% is applied.

Go further: Income tax explained - learn more about the taxes you pay

National Insurance    

The second largest source of revenue is National insurance, paid by employers, employees and the self-employed. In 2012-13 it raised £102bn.

Most employees pay Class 1 National insurance contributions at 12% (on earnings between the lower earnings limit and the upper earnings limit). On earnings above the upper earnings limit, the rate falls to 2%. 

Those who are contracted-out of the additional state pension pay National insurance contributions at a reduced rate - a distinction that is due to end in 2016.

Go further: National insurance explained - get to grips with what you need to pay 

Value Added Tax (VAT)     

A tax on spending is the third largest revenue earner- with VAT contributing £100bn to Treasury coffers.

VAT is not charged on books, newspapers, children's clothing and most food (these items are zero-rated). Most other goods are charged full-rate VAT (currently 20%). 

The rise in tax revenue from these three sources has been fairly steady over the years, apart from the years 2009-10, when income tax receipts fell sharply due to the economic recession and international financial crisis. National insurance revenue also dipped during these years.

The standard rate of VAT has risen over the years- from 10% when it was first introduced in 1973, to 15% in the 1980s. It went up to 17.5% in 1991 and remained at this level until 2009 when the basic rate fell to 15% on a temporary basis. In 2010 the rate went back to 17.5%, and in 2011 it rose to the current 20%.

These three taxes account for around two thirds of HMRC’s total revenue. The chart above shows tax revenue in nominal terms (not allowing for inflation).

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