Before taxes and benefits, the richest one-fifth of people had an average household income of £88,200 per year in the financial year ending (FYE) 2018, based on estimates from the Living Costs and Food Survey; this is 11 times greater than that of the poorest one-fifth (£7,900 per year).
Overall, taxes and benefits lead to income being shared more equally; after all taxes and benefits are taken into account, the ratio between the average household income of the richest and poorest one-fifth of people (£65,500 and £18,900 respectively) is reduced to less than four.
Cash benefits were most effective at reducing income inequality in FYE 2018, although their effect has diminished over the past seven years, partly reflecting a fall in their value relative to incomes before taxes and benefits.
Average annual incomes, taxes and benefits, and household characteristics of retired and non-retired households in the UK. Data for financial years, by quintile and decile groups, country and region and tenure type.
The redistribution effects on individuals and households of direct and indirect taxation and benefits received in cash or kind analysed by household type, and the changing levels of income inequality over time.
This article describes the results of analysis of the financial capability measures contained in the 2010 to 2012 Wealth and Assets Survey, many of which were asked for the first time in this wave. It has been written by Andrea Finney and David Hayes of the University of Bristol’s Personal Finance Research Centre to follow the style of an Office for National Statistics statistical bulletin