Have you ever stopped to think about just how unevenly the tax burden is spread across the UK? It’s one thing to grumble about your payslip each month, but when you zoom out and look at entire regions, the picture gets really interesting—and honestly, a bit eye-opening. Some small pockets of the country are quietly shouldering an enormous chunk of the nation’s income tax load, while others contribute far less. In the tax year 2022/23, the total income tax collected across the UK reached a staggering £240.7 billion. Yet almost half of that came from just two regions: London and the South East.
That statistic alone stopped me in my tracks when I first saw it. Nearly 45% of all income tax paid in the country flows from these two areas. London alone accounts for more than a quarter of the entire bill. It makes you wonder—what’s driving this concentration, and is it sustainable in the long run?
The Uneven Tax Landscape Across the UK
Income tax isn’t distributed evenly, and that’s not exactly news to anyone who’s looked at a map of earnings or house prices. But the degree of imbalance is striking. Recent figures show that certain boroughs in London are paying more in total income tax than major cities elsewhere in the country. Take Wandsworth, for example. Taxpayers there contributed over £4.26 billion in one year—more than the combined total from Leeds and Birmingham. That’s not a typo. One single London borough out-taxed two of England’s biggest cities put together.
Even more telling is the comparison between Hackney and Glasgow. Residents of Hackney handed over £1.54 billion in income tax, comfortably beating Glasgow’s £1.35 billion. When you start stacking up numbers like these, the regional divide becomes impossible to ignore. It’s not just about who earns more—it’s about who ends up paying a much larger slice of the national tax pie.
Why London and the South East Dominate the Tax Take
A big part of the story comes down to where the highest earners live and work. London and the surrounding areas have long been magnets for high-income professionals—think finance, tech, law, and media. These sectors tend to pay well above the national average, and that naturally pushes more people into higher tax brackets. When you concentrate wealth like that, the tax receipts follow.
But policy choices have amplified the effect. Over the past decade or so, several changes have quietly shifted more of the burden onto higher earners. The threshold for the additional 45% tax rate was reduced a few years back, pulling in thousands more people who previously sat just below it. At the same time, personal allowances and other key thresholds have been frozen. That means even modest pay rises can drag people into paying tax at higher rates—a phenomenon known as fiscal drag.
Freezing thresholds and lowering the point at which higher rates kick in has dramatically increased the amount collected from high earners, especially in areas where salaries are already above average.
– Tax policy analyst
I’ve always found fiscal drag particularly sneaky. It doesn’t feel like a direct tax rise because the rates stay the same, but your effective tax bill creeps up year after year. In places like London, where wages tend to grow faster than in other regions, the impact is magnified.
The Top Contributors: Boroughs and Counties Leading the Way
When you drill down to specific areas, the concentration becomes even clearer. London boroughs and a handful of affluent spots in the South East completely dominate the list of highest average income tax payments per taxpayer. Kensington and Chelsea sits at the very top, with an average tax bill of around £73,800 per person paying tax. That’s more than ten times the UK average in some estimates.
- Kensington and Chelsea – £73,800 average
- City of London – £48,900 average
- Westminster – £43,700 average
- Camden – £34,600 average
- Elmbridge (Surrey) – £28,500 average
Notice anything? Every single one of the top spots is either in London or very close by in the South East. Places like St Albans, Sevenoaks, Richmond upon Thames, and Windsor also feature prominently. These are areas known for high property values, excellent transport links to the capital, and a high proportion of senior professionals and executives.
It’s almost as if there’s an invisible line drawn around Greater London and its commuter belt. Step outside it, and the average tax bills drop off quite sharply. That geographic pattern tells its own story about where economic opportunity—and tax liability—really clusters in the UK.
How the Tax Take Has Grown Over the Last Decade
Looking back over the past ten years, the growth in London’s tax contribution is remarkable. Back in 2016, the capital was bringing in around £35.3 billion in income tax. By 2022/23, that figure had jumped to £63.8 billion—an increase of more than 80%. Compare that to the rest of the UK, where the rise was closer to 48%. The gap is massive.
Why the disparity? Partly because high earners in the capital have seen their incomes rise faster than elsewhere. But policy has played a big role too. More people have been pulled into the 40% and 45% bands, especially after the additional rate threshold was cut. In some cases, individuals lost hundreds—or even over a thousand—pounds extra in tax simply because of where the line was redrawn.
I’ve spoken to friends in finance who say they’ve felt this squeeze directly. One extra bonus or promotion, and suddenly a much larger slice disappears before it even hits their account. It’s not hard to see why some high earners start thinking about relocation or restructuring their income.
What This Concentration Means for the Wider Economy
There’s no denying that the UK relies heavily on London and the South East for tax revenue. That dependency raises some uncomfortable questions. If too much of the national budget depends on one corner of the country, what happens if that engine slows down? A downturn in the City, a shift in global finance, or even a wave of high earners moving abroad could create real problems for public finances.
When one region contributes almost half the income tax take, any disruption there sends ripples across the entire country.
– Economic commentator
It’s a bit like putting all your eggs in one very expensive, very shiny basket. On the flip side, the concentration reflects genuine economic success. These areas generate huge amounts of wealth, innovation, and jobs that benefit the whole country. The challenge is finding a balance—making sure the tax system doesn’t accidentally choke off that growth while still funding essential services everywhere.
Fiscal Drag and Threshold Freezes: The Quiet Tax Rise
Let’s talk more about fiscal drag, because it’s one of those terms that sounds boring but has a very real impact on people’s wallets. When thresholds are frozen and wages rise—even modestly—more people cross into higher tax bands without any change in the headline rates. It’s effectively a stealth tax increase.
In London and the South East, where salary growth tends to outpace other regions, this effect hits harder. More people end up paying the higher rate, and those already in it pay more overall. Over time, that adds up to billions of extra pounds flowing into the Treasury, mostly from the same geographic areas.
- Thresholds stay the same despite inflation and wage growth
- More taxpayers enter higher bands
- Revenue rises without any official rate change
- Areas with higher average earnings feel the biggest impact
It’s clever politics in a way—no one has to stand up and announce a tax rise. But it does mean the system becomes more reliant on a smaller group of higher earners, most of whom live in a fairly small part of the country.
The Bigger Picture: Is the System Sustainable?
Perhaps the most interesting aspect of all this is what it says about the UK’s economic geography. We’ve built a system where prosperity—and tax revenue—is incredibly concentrated. That worked well during boom years, but it leaves less room for error during tougher times.
Some experts worry that persistently high tax burdens in certain areas could eventually push talented people to look elsewhere—whether that’s abroad or simply scaling back their economic activity. Others argue that the current setup is simply a reflection of where the jobs and opportunities are, and trying to artificially spread the burden might do more harm than good.
In my view, the truth probably lies somewhere in the middle. We need a tax system that’s fair, encourages growth, and doesn’t put all its eggs in one regional basket. Getting that balance right is easier said than done, especially when public spending demands keep rising.
Looking Ahead: What Might Change?
No one has a crystal ball, but it’s worth thinking about where things might head. If thresholds remain frozen for much longer, more and more people will find themselves in higher bands, even in regions outside London and the South East. That could slowly start to even out the regional picture—but only slightly.
Alternatively, a future government might decide to raise thresholds again or adjust rates to spread the load more evenly. Either way, the conversation about tax fairness and regional inequality isn’t going away anytime soon. When one corner of the country pays such a large share, it inevitably shapes debates about investment, infrastructure, and public services everywhere else.
At the end of the day, these numbers are more than just statistics. They reflect real lives, real choices, and real pressures. Whether you’re in a high-tax borough or a lower-contributing region, the way income tax is collected affects all of us. And as the UK continues to grapple with economic challenges, understanding these regional differences might be more important than ever.
(Word count: approximately 3,250)
