The government monitors the payment of taxes in a variety of ways. They produce statistics at regular intervals and yesterday published a table showing “the distribution of tax deducted from pay … by employers under the PAYE system by industry group…”. Catchy title it is not, but it does show us which industry sectors pay in the highest proportion of tax to the Treasury through the PAYE system.
The table runs from 2004-05 to 2016-17 tax years, adding each year as it passes and the information becomes available. It does not include National Insurance Contributions or pension payments.
Top ten taxpaying industry groups:
For the tax year 2016-17, this is the percentage of the overall PAYE tax paid by each industry:
- Financial and Insurance Activities: 17.1%
- Professional, Scientific and Technical Activities: 12.2%
- Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles: 10.4%
- Manufacturing: 9.6%
- Human Health and Social Work Activities: 8.2%
- Information and Communication: 8.1%
- Education: 6.9%
- Administrative and Support Service Activities: 5.6%
- Construction: 4.6%
- Transportation and Storage: 4.3%
The industry sectors are defined by the ‘UK Standard Industrial Classification of Economic Activities’ (SIC). This was altered in 1992,2003 and 2007, which means that earlier comparisons can be tricky. They may have been amalgamated into one sector, or divided into separate industry categories.
Tracking the top three
It is interesting to look at the development of each of the industries in the top three.
Financial and Insurance Activities
- 2007-08 – 14.9%
- 2012-13 – 16.0%
- 2016-17 – 17.1%
This category remained at the top of the list by some way for the last 10 years. Meaning that now nearly 20% of the total PAYE tax earned by the government has come from this industry sector.
Professional, Scientific and Technical Activities
- 2007-08 – 9.3% (4th place)
- 2012-13 – 10.2% (4th place)
- 2016-17 – 12.2% (2nd place)
Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles
- 2007-08 – 11.0% (3rd place)
- 2012-13 – 10.6% (2nd place)
- 2016-17 – 10.4% (3rd place)
Another comparison to be drawn is the shift in the top 5 over time.
Financial and Insurance Activities – 14.9%
Manufacturing – 11.6%
Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles – 11.0%
Professional, Scientific and Technical Activities – 9.3%
Education – 9.3%
Financial and Insurance Activities – 16.0%
Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles – 10.6%
Manufacturing – 10.5%
Professional, Scientific and Technical Activities – 10.2%
Education – 9.3%
What does this tell us about who pays the most tax?
What does this tell us? It shows us where the Treasury earn the highest percentage of PAYE income tax. But, as with any statistics, this information raises more questions than answers.
Why has Education fallen by almost 4% in five years?
Is the Finance and Insurance proportion of the tax take so big because of the numbers working in the industry, or because they have higher salaries? What does this say about how much Britain relies on the Finance sector for its income and how should we be protecting that?
Why has Manufacturing slipped down from second to fourth in just 10 years?
In what ways have the Professional, Scientific and Technical sector grown and how can we encourage that further?
The bare figures don’t answer these questions and, if the answers affect your industry, you may want to delve deeper. You can find your industry in the government’s published documentation and make up your own mind once you have read around the issues and considered all the facts.
It is, at the very least, a good reminder that those who earn the most also pay the most tax back into the collective pot. ‘Fairness’ in tax payments isn’t always as cut and dried as it first seems.