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Release: The Effects of Taxes and Benefits on Household Income, 2012/13

Released: 26 June 2014


Richard Tonkin

Household Income and Expenditure Analysis

Telephone: +44 (0)1633 456082

Categories: Economy, Personal Finances, Personal Income and Wealth, Income Inequality of Households, People and Places, Housing and Households, Households, Household Income and Expenditure

Frequency of release: Annually

Language: English

Geographical coverage: UK

Geographical breakdown: UK and GB

Survey name(s): Living Costs and Food Survey

  • Before taxes and benefits, the richest fifth of households had an average income of £81,300 in 2012/13, almost 15 times greater than the poorest fifth, who had an average income of £5,500.


  • Fifty-two per cent of households received more in benefits (including in-kind benefits such as education) than they paid in taxes in 2012/13. This is equivalent to 13.8 million households.


  • The average disposable income in 2012/13 was unchanged from 2011/12, but it remains lower than at the start of the economic downturn, with equivalised disposable income falling by £1,200 since 2007/08 in real terms. The fall in income has been largest for the richest fifth of households (5.2%). In contrast, after accounting for inflation and household composition, the average income for the poorest fifth has grown over this period (3.5%).


  • Cash benefits made up 56.4% of the gross income of the poorest fifth of households (£7,200), compared with 3.2% (£2,700) of the income of richest fifth.


  • The richest fifth of households paid £29,500 in taxes (direct and indirect) compared with £4,700 for the poorest fifth, though both groups paid a similar proportion of their gross income (35.1% and 37.4% respectively).

Examines how taxes and benefits redistribute income between various groups of households in the UK. The study shows where different types of households and individuals are in the income distribution and looks at the changing levels of income inequality over time.

These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Content from the Office for National Statistics.
© Crown Copyright applies unless otherwise stated.