THE poorest households are now paying the greatest proportion of their income in taxes, says the Tax Payers Alliance.

Analysis of Office for National Statistics (ONS) data by the TPA shows that the poorest households now pay almost 57% of their income in various forms of tax, the highest proportion of any group.

The ONS data takes into account not just the income tax that is taken out of people’s wages, but also things like TV licences, council tax and VAT.

The information shows that for the lowest income households, total tax as a percentage of gross income has increased by almost 13 percentage points from the previous year, up from 44%. The rise is largely driven by income tax, which makes up around a quarter of their total tax bill and almost quadrupled from £523 per household in 2018-19 to £1,947 per household in 2019-20. The total tax bill for the poorest households is now estimated to be £8,264 per year.

With taxpayers already facing the highest sustained tax burden in 70 years and COVID-19 hitting working households hard, the TaxPayers’ Alliance is calling on the chancellor to cut taxes on the poorest, to offer a respite from these rises and help them recover from the crisis.

Key findings in the ONS data:

- For the bottom income decile, the average gross income was £14,547 per household. Direct and indirect taxes for this group averaged £8,264.

- The bottom decile paid the largest proportion of their income in taxes at 56.81%.

- VAT took up 14% of the bottom decile’s gross income and 25% of the total taxes paid. This was the highest proportion of any group.

- 14.17% (£1,171) of taxes paid by the bottom decile was for council tax, with only those in the second lowest decile paying a higher proportion (14.41%).

- Income tax accounted for 13% of the poorest’s gross income and 24% of the total taxes paid by the bottom decile.

- Alcohol duties cost the poorest 1.32% of their gross income in 2019-20.

- Similarly, TV licences take up a far higher proportion of the taxes paid by the poorest at 1.38% in 2019-20, compared to 0.18% for the top decile.

John O’Connell, chief executive of the TaxPayers’ Alliance, said: “It’s not just the pandemic that’s punished the poorest, but relentless tax rises too. Struggling families have been battered by endless hikes and now face losing 57p of every pound they earn to the taxman.

“Hard hit households need tax cuts to ease the burden and help them recover from this crisis.”