Enable Independent were interested to see that the income gap between the poorest and the richest in the UK is at its lowest for 26 years, this new data comes at the same time that Londoners also have the lowest disposable income.
These new stats come from the ONS (The Office for National Statistics) that say that indirect taxes such as VAT on goods and fuel duty have decreased the income equality. The new statistics reveal that the fifth poorest households in the UK spend nearly a third of their income on indirect taxes such as VAT, alcohol and fuel duty between 2011 and 2012.
The ONS have statistics have also revealed that by increasing the rate of VAT from 17.5% to 20% in 2011 has increased the amount of indirect tax paid by the lowest earners to up to £3,400 per year, which is £29% of their disposable money.
The richest people in the country, the top fifth of households, paid just over half as much, an average of £8,700 per year, which is 14% of their disposable income. Resulting in the increase of inequality of income.
Unsurprisingly the general view of the Unions in the UK is that rather than the Government increasing the lower-rate tax limit to £10,000 in the UK, that it should reduce the amount of VAT instead.
The TUC’s general secretary, Frances O’Grady, stated: “Low-income families will gain virtually nothing from the increase in the personal allowance, but will continue to lose significantly from the rise in VAT.
“Contrary to what ministers claim, the government’s tax policies are having a negative impact on the poorest households.”
If you like many other Britons have experienced tougher times due to the reduction of your disposable income, then why not come and see our team of IFAs we will be able to review your current financial situation, giving you practical, straight-forward advice on ways in which you could improve your situation.