How many people do not pay income tax in the West Midlands? regions vary as Liz Truss plans tax cuts

Tens of millions of people who do not earn enough to pay income tax could be left behind if new Prime Minister Liz Truss pushes ahead with plans to prioritise tax cuts to tackle the cost of living crisis.

Women and people in the North East and Northern Ireland are among the groups where the most people are set to miss out on a potential income tax cut. Women and people in the North East and Northern Ireland will be among those to see the least benefit from potential income tax cuts.

She is reportedly also considering cutting income tax, possibly by raising the personal allowance, so people can earn more before they start paying tax.

But analysis shows more than 20 million people across the UK are already expected to pay no income tax this financial year, either because they have no income, earn less than the current £12,570 personal allowance, or their deductions and tax reliefs put them below the income tax threshold.

HMRC data shows 34 million people in the UK are projected to pay income tax in 2022/23. That is 63% of the estimated 54 million people aged 16 and over, according to Office for National Statistics (ONS) population figures for mid 2020 – meaning 37% of adults will not pay tax.

What does the data show for the West Midlands?

The HMRC data shows that 2,830,000 in the West Midlands are projected to pay income tax in 2022/23.

According to the data, 1,961,343 people pay no income tax in the West Midlands (41%). This compares with the North and Yorkshire as a whole, where 41% of adults do not pay tax. Neither do 37% of Londoners, and 34% in the rest of the South.

New Prime Minister Liz Truss has proposed tax cuts including increasing the threshold of personal allowance. However, these measures are unlikely to improve the situation for those who have no income, earn less than the personal allowance threshold, or their tax reliefs, deductions and personal allowance exceeds their income. The current personal allowance threshold is £12,570.

There are more women who are expected to not pay tax than men, and tax cuts are unlikely to help them in the cost of living crisis. Almost 13 million women would not be benefitted from tax cuts in the UK. In the West Midlands, 1,234,733 women would see no change to their income because of this.

As more men pay tax, they are expected to see a rise in their income if tax cuts are introduced. However, in the West Midlands, 30% of men won’t be affected by this policy.

Reaction to proposed cuts

A representative of the UK Women’s Budget Group said: “The cost of living crisis is hitting the poorest women hardest, but the tax cuts that Liz Truss is proposing will largely benefit better off men. Those not paying income tax stand nothing to gain from these policies though they are often the most in need.

“Our analysis shows that a National Insurance cut would save women less each year than men. It would also leave a gap of £13bn for health and social care, sectors in which women are overrepresented, particularly in part-time and precarious roles. They are also services on which poorer women are more reliant. Overstretching these services will leave women without much needed support. Truss’ focus on cutting taxes benefits the highest earners while doing little to ease the current crisis.”

Liz Truss’ plan for West Midlands

However, Truss has said she wants the West Midlands “at the heart of our economic revival”. Apart from tax cuts, she plans to add better regulation and supply side reform in the region.

“From Coventry’s cars to Stoke’s ceramics, the West Midlands is a vital part of the UK’s economic engine, and plays host to some of the most innovative industries and companies in the country. My plan will support and harness that power, helping our businesses grow and provide the high quality jobs that we need.

“The West Midlands can play a critical role in a new economic revolution in Britain. I will cut taxes on families and firms, support vital infrastructure and create new Investment Zones to deliver for the people of the West Midlands. I will also strengthen devolution to put more power in the hands of our excellent local leaders like Andy Street,” she had said.

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