Smart InvestorsSmart Investors

Personal Income Statistics

Personal income statistics for 2015/16, published by HMRC this week, reveal smart investors are behind an £11bn tax increase in the UK’s tax bill. A summary of the key statistics is as follows:

  • Taxpayers’ total income rose by £63bn in 2015/16, to £1,040bn
  • The top 1% of taxpayers are now paying 30% of all income tax, up from 27% in 2014/15
  • Higher-rate and additional rate tax payers, who make up 16% of UK taxpayers, provided two-thirds of all UK income tax (£120bn of the total tax liabilities of £178bn)
  • Of the £63bn increase in total income, an estimated £13.2bn was due to smart taxpayers bringing forward dividend income into the 2015/16 tax year to take advantage of lower tax rates before dividend taxation changes came into force in April 2016, as illustrated below:


20% taxpayers

40% taxpayers

45% taxpayers

Effective dividend rate pre 6/4/16 (after 10% tax credit)




Dividend rate post 6/4/16 (after £5,000 dividend allowance)




Regarding personal taxation, individuals should be aware of various legislative changes taking place from 6 April 2018, such as the tax-free dividend allowance reducing from £5,000 to £2,000 and further reductions in mortgage interest rate relief for landlords (only 50% of financing costs can be deducted from rental income in 2018/19, down from 75% in 2017/18). Alongside the 3% stamp duty surcharge levied on second homes or buy-to-let properties since April 2016, this has caused new investment in buy-to-let property to fall by 80% (£25bn to £5bn) between 2015 and 2017.

The full publication can be found here:

With the current tax year end looming, you have until 5 April to use your 2017/18 allowances in tax-efficient wrappers such as ISAs and pensions.

If you are a higher or additional rate tax-payer and would like to find out more about how you can maximise your available tax allowances, please contact us via email or call 020 3651 0570 (London), 01223 52 2000 (Cambridge).