Note: Horizontal axis shows labour cost (gross earnings + employer NICs) for employment and gross profits (earnings) for self-employment; marginal NICs rate is expressed as a percentage of that labour cost / profit. Self-employed NICs lines include Class 2 contributions in the average rate, but exclude them in the marginal rate. Employee + employer lines assume earnings are stable throughout the year and ignore the employment allowance.
Source: Authors' calculations using tax rates from IFS Fiscal Facts.
Income tax is the single most important source of revenue for the UK Treasury. It is forecast to raise around £200 billion in 2021–22 – about a quarter of all government tax receipts.