Edinburgh pays most income tax after London’s £71bn bill

Londoners pay nearly 12% more in income tax in a single year hitting record £71.5bn, HMRC figures show, with Scottish capital Edinburgh in second spot at £2.97bn

The latest annual income tax figures from HMRC reveal huge geographic swings in the amount of tax paid across the UK for who is paying the annual £268bn income tax bill.

London is top of the chart by miles for the 2023-24 tax year, paying £71.5bn and accounting for more than a quarter of the total paid, while the 10 largest cities in the country outside the capital pay a combined £16.28bn.

The total tax paid by London in 2023-24 was £71.5bn, up a shocking 11.5% from £64.1bn the previous year, based on its population of 9.5 million citizens.

In the capital, it is the central wealthy boroughs doing the heaviest lifting on the tax front, the government’s widest shoulders in other words.

Kensington and Chelsea residents paid the most income tax at £5.58bn in 2023-24, up from £5.3bn the previous tax year, and Westminster paid nearly as much at £5.04bn up from £4.74bn.

Third on the list was Camden, home to the current PM and many politicians and celebrities, at £4.90bn up from £3.94bn. In fourth spot was Wandsworth at £4.80bn, again up substantially from £4.36bn.

Beyond the central wealthiest part of the capital, the taxpayers of the borough of Barnet paid £3.07bn up from £2.84bn, and out west in Richmond, home to many famous actors and pop stars, the total income tax bill came in at £3.16bn, up from £2.89bn year on year .

At the other end of the scale in London, only two boroughs were estimated to have paid less than £1bn in 2023-24, the low residential density City of London at £661m, and Barking & Dagenham at £545m, which was also hit with a huge hike in tax bills from £456m the previous year.

The biggest cities in the country and what their people pay

When filtering out the numbers to focus only on the UK’s largest cities beyond London, based on population and the amount of tax paid, Edinburgh was the second biggest contributor outside London at £2.97bn, up from £2.68bn the previous year. Then Birmingham and Leeds were in joint third at £2.51bn each, with Bristol in fifth at £1.74bn.

Income tax paid 2023-24 - top 10 UK cities by population

Source: Analysis of HMRC Total Tax Amount (Upper) 2023-24/2022-23

In terms of the total tax estimated, the UK’s nine largest cities paid a total of £16.28bn in income tax, accounting for 23% of the highest populated city tax slice.

Scotland’s total income tax paid came in at £18.8bn, up significantly from the previous year’s £16.4bn, while for Wales it was £7.61bn, up from £6.64bn, and Northern Ireland was £4.34bn, up from £3.84bn.

Fiscal drag is clearly having a punitive impact across all parts of the country, and is set to get worse as thresholds are frozen for another five years until April 2031, dragging state pensioners on sole income and low earners into tax, and millions of workers and self employed into the 40p tax rate.

Beyond the biggest cities the unitary authority of North Yorkshire paid £2.53bn, highest on the list for a primarily rural area where there is high demand from wealthy retirees and second-home or holiday-let buyers in the area, driving up the tax take in the county.

Back in the southeast on the outskirts of London, Elmbridge in Surrey, home to one of the more affluent areas in the country with the gated splendours of Weybridge and close to nearby Wentworth Golf Club in Virginia Water, paid £2.49bn, just below Birmingham’s £2.51bn figure. Also close to London, St Albans in the heart of the commuter belt, even with hybrid, paid £1.83bn.

Another area breaking the £2bn figure is Wiltshire in sixth place overall, paying £2.21bn, reflecting the affluent part of the country with its popular Cotswolds draw for the rich and famous.

The Southwest covers a vast area from Bath and Bristol to south Gloucestershire and Poole with its super rich Sandbanks, accounting for £18.9bn in income tax paid.

With cities such as Bath just shy of nearly a billion in tax at £929m and Bournemouth total at £1.36bn, the region has a large concentration of professional and technical jobs, and earnings well above the national average, creating strong income tax receipts.

Bristol is ninth in its own right on the city listing, with a population of 480,000, its residents paid £1.74bn. It is no surprise Bristol comfortably makes it over the £1bn mark as it is one of the largest financial centres outside London, with major employers including Lloyds, Hargreaves Lansdown and NatWest, not to mention a big scientific, academic and media employment base.

Rounding up the regional top 10 was West Northamptonshire in the East Midlands, one of two unitary authorities that make up the county of Northamptonshire, which together paid £1.92bn, sitting as it does between Birmingham and Oxford.

Taking a deeper dive into the figures, Kensington and Chelsea (£5.4bn) paid more than Leeds (£2.4bn), Birmingham (£2.4bn), Manchester (£1.2bn), and Liverpool (£1bn) combined.

Even the London borough with the lowest figure, Barking and Dagenham on £506m, still paid more than many larger towns and cities including Stafford (£454m), Rugby (£464m), Ipswich (£321m), Slough (£468m), Dover (£324m) and Dundee (£325m).

The Home Counties were some of the biggest taxpayers after London, with Kent paying £7.11bn, and Sevenoaks alone paying £1.28bn, Surrey county £11.1bn and West Sussex £3.9bn.

Outside the high paying south, the northwest paid the most at £21.5bn, with Cheshire East (£2.2bn), and Cheshire West (£1.3bn) major payers. This is down to Cheshire being a hotspot for top-earning Premier League footballers with the popular towns of Alderley Edge and Wilmslow long being a draw for top players.

Source: Business & Accountancy Daily

Looking for advice? Check out our full range of services. From payroll help to taxation advice, our expert team is available to lend a hand.