Taxes and revenue

Effects of taxes and benefits on UK household income: financial year ending 2018

What's in the bulletin?

• Before taxes and benefits, the richest one-fifth of people had an average household income of £88,200 per year in the financial year ending (FYE) 2018, based on estimates from the Living Costs and Food Survey; this is 11 times greater than that of the poorest one-fifth (£7,900 per year).
• Overall, taxes and benefits lead to income being shared more equally; after all taxes and benefits are taken into account, the ratio between the average household income of the richest and poorest one-fifth of people (£65,500 and £18,900 respectively) is reduced to less than four.
• Cash benefits were most effective at reducing income inequality in FYE 2018, although their effect has diminished over the past seven years, partly reflecting a fall in their value relative to incomes before taxes and benefits.