Skip to main content

Personal Income

Volume 463: debated on Tuesday 17 July 2007

To ask the Chancellor of the Exchequer what percentage of total UK (a) income and (b) wealth was held by (i) each quintile of the income distribution, (ii) the top 10 per cent., (iii) the top 5 per cent., (iv) the top 1 per cent. and (v) the top 0.1 per cent.; how many persons were in each category; what the lowest level of income and wealth was in each category; and what the levels and percentages were in (A) 1979, (B) 1990, (C) 1997, (D) 2002 and (E) 2007. (149811)

The information requested falls within the responsibility of the National Statistician, who has been asked to reply.

Letter from Karen Dunnell, dated 17 July 2007:

As National Statistician, I have been asked to reply to your recent question asking the Chancellor of the Exchequer, what percentage of total UK (a) income and (b) wealth was held by (i) each quintile of the income distribution, (ii) the top 10 per cent., (iii) the top five per cent., (iv) the top one per cent, and (v) the top 0.1 per cent.; how many persons were in each category; what the lowest level of income and wealth was in each category; and what the levels and percentages were in (A) 1979, (B) 1990, (C) 1997, (D) 2002 and (E) 2007. (149811).

Income

Statistics on household and personal incomes are available from both household surveys and tax records.

The ONS publishes an annual article on ‘The effects of taxes and benefits on household income’ which is based on data collected in the Expenditure and Food Survey (EPS). The EPS uses an annual sample of approximately 7,000 households in the UK, and provides a comprehensive measurement of all sources of income for private households in the UK. The results are presented for households rather than individuals, and the individuals within each household are assumed to benefit equally from the household’s income. While these survey based results provide an accurate picture of the broad distribution of income, because of the relatively small sample size, it is not possible to produce reliable statistics for households at the extremes of the distribution, particularly the top (or bottom) 1 per cent and top (or bottom) 0.1 per cent of households.

Tax records do provide more reliable statistics about the top end of the income distribution. HM Revenue and Custom’s Survey of Personal Incomes (SPI) is based on a large sample of tax records and provides a measure of annual income for taxpayers. The survey excludes almost two fifths of adults in the UK who have no income tax liability, and measures individual rather than household income. However, it does provide very good coverage of the top end of the income distribution, since all individuals at the top of the income distribution should be taxpayers.

For these reasons, estimates of income have been provided from both of these sources.

Results for quintile groups and for the top ten per cent have been provided from the ONS’s taxes and benefits article (Table 1), while results for the top 5 per cent, top 1 per cent, and top 0.1 per cent have been provided from HMRC’s Survey of Personal Incomes (Table 2).

However it should be emphasised that the results from these two sources are not directly comparable because of important differences in concept and coverage. The ONS figures are based on household incomes, and are based on a ranking of households, so in this case the top decile, is the top 10 per cent of households, ranked by household income. The HMRC figures on the other hand, show individual incomes and are based on a ranking of individuals. Furthermore, the ONS’s estimates are based on a sample of all private households in the UK, whereas the HMRC figures are only representative of taxpayers. So in this case, the top 1 per cent, is the top 1 per cent of individuals, based on a ranking of taxpayers only.

Table 1 shows the percentage share of total equivalised disposable household income for quintile groups and for the top decile. Also shown are the lower bounds (the percentile points) for these groups (in £ per year), and the number of households per quantile group.

The income quantile groups are determined by ranking households according to their equivalised disposable income. Equivalised incomes are standardised to take into account different sizes and compositions of households. The standard household is deemed to be a two adult household with no children, and so these equivalised incomes can be interpreted as indicating a standard of living that would be achieved by a standard household with that income. Disposable income is gross income from all sources less income tax, national insurance contributions and council tax.

Table 2 shows the percentage share of total income for the top 5 per cent, top 1 per cent, and top 0.1 per cent of individual taxpayers. The figures are shown both before and after deduction of income tax (but without national insurance contributions or council tax deducted), although the ranking of individuals is based on income before tax. Again, percentile points and the number of individuals in each of these groups are also shown.

Both sets of estimates provided here are subject to sampling variation, although the HMRC estimates are based on a very large sample of administrative records (520,000 in 2004/05) and are therefore less subject to sampling variation. For this reason, the income shares in Table 2 are shown to an extra decimal place, while those in Table 1 are rounded to the nearest 1 per cent.

Estimates have been provided for the years closest to those requested, although particularly for 1979, not all estimates are available. The earlier years which are shown in Table 1 are calendar years rather than financial years.

Wealth

Information on the percentage of UK wealth held by those in different income ranges is not available. Although HMRC do produce wealth distribution statistics, the data which underpins these statistics includes no information on income and cannot be combined with other data sources to provide a suitable basis for analysing the relationship between wealth and income. Wealth distribution statistics are published at http://www.hmrc.gov.uk/stats/personal_wealth/menu.htm

The ONS has recently introduced a Household Assets Survey which will measure both income and wealth for UK households. Initial results from the Household Assets Survey are due to be published at the end of this year.

Table 1: percentage shares of total equivalised disposable household income1,2 by quantile group for all households3; and quantile boundaries

1979

1990

1997-98

2002-03

2005-06

Quantile shares (Percentage)

By quintile group

Bottom

9

7

8

8

8

2nd

13

11

12

12

12

3rd

18

16

16

17

16

4th

23

23

23

23

22

Top

36

43

42

41

41

Top decile

n/a

28

26

26

26

All households

100

100

100

100

100

Lower percentile points for quantile groups (£ per year)

By quintile group

2nd

n/a

5,629

8,504

11,196

12,835

3rd

n/a

8,248

11,922

15,516

17,231

4th

n/a

11,894

16,342

20,860

23,204

Top

n/a

17,152

23,457

29,575

32,335

Top decile

n/a

22,672

30,451

38,275

42,827

Number of households per quantile (Thousand)

By quintile group

Bottom

n/a

n/a

4,909

4,868

4,956

2nd

n/a

n/a

4,938

4,870

4,961

3rd

n/a

n/a

4,909

4,869

4,961

4th

n/a

n/a

4,911

4,869

4,961

Top

n/a

n/a

4,908

4,870

4,960

Top decile

n/a

n/a

2,453

2,437

2,482

All households

n/a

n/a

24,556

24,346

24,799

n/a = Not available

1 Disposable income is equal to gross income from all sources less income tax, national insurance contributions, and council tax.

2 From 1990 this includes company car benefit and beneficial house purchase loans from employers.

3 Ranked by equivalised disposable household income.

Source:

ONS, Expenditure and Food Survey

Table 2: percentage shares of total income for the top 5 per cent., top 1 per cent., and top 0.1 per cent. of individual taxpayers1; and percentile points

1979-80

1990-91

1997-98

2002-03

2004-05

Percentage shares of total income (Before tax)

Top 5 per cent.

n/a

19.4

22.4

23.3

23.8

Top 1 per cent.

n/a

8.0

10.5

10.8

11.3

Top 0.1 per cent.

n/a

2.2

3.7

3.7

4.0

Percentage shares of total income (After tax)2

Top 5 per cent.

n/a

17.0

20.0

19.7

20.3

Top 1 per cent.

n/a

6.5

8.7

8.6

9.1

Top 0.1 per cent.

n/a

1.8

3.0

2.9

3.1

Percentile points (Income before tax, £ per year)

Top 5 per cent

n/a

30,100

39,000

49,800

52,400

Top 1 per cent.

n/a

57,200

83,700

108,000

117,000

Top 0.1 per cent.

n/a

174,000

281,000

385,000

418,000

Number of individuals per group (Thousand)

Top 5 per cent.

n/a

1,305

1,310

1,445

1,515

Top 1 per cent.

n/a

261

262

289

303

Top 0.1 per cent.

n/a

26

26

30

30

n/a = Not available

1 Ranked by income before tax.

2 After tax income is equal to gross income less income tax (but national insurance contributions and council tax are not deducted).

Source:

HMRC, Survey of Personal Incomes