Budget 2013: Who has lost the most and the least?

Chart showing impact of tax and benefit changes by income group

The chancellor may find himself looking in the Budget for some extra sources of money for the government, to try to trim its borrowing.

If he does, it would make sense for him to look at who has taken the biggest hit so far.

It is possible to look at the impact of all the measures announced so far covering the period between the government coming to power in 2010 and the end of the tax year 2015-16, as the Institute for Fiscal Studies (IFS) has done.

"The chancellor has said that those with the broadest shoulders should bear the biggest burden of any further consolidation," says Paul Johnson, director of the IFS.

Paul Johnson, director of the IFS, says the Budget may target those with the most wealth rather than the highest incomes.

"It is fair to say that up till now the highest-income people have, since January 2010, seen the biggest increases in tax, by some considerable distance actually."

Indeed, IFS figures show that taking all the tax and benefit changes announced so far for 2010-16, the people with the top 10% of incomes will see those incomes drop by 7.6% on average.

Those on the highest incomes have been hit by measures such as the loss of the tax-free allowance for people earning above £100,000, loss of child benefit for higher earners and restrictions on how much they can contribute tax-free to their pensions.

In percentage terms they have lost considerably more than the next worst-hit group, which is the poorest 10%, who are expected to see their incomes drop by 4.9%.

So on this analysis, there is little sign of the so-called squeezed middle. Those with incomes above the bottom 10% and below the top 10% have benefited from the increases in the amount they can earn before they have to pay any income tax, even if they have suffered from their wages failing to keep up with rising prices, which is not reflected in these figures.

Budget 2013 graphic

The chancellor will give his fourth Budget speech on 20 March at 12:30 GMT

There is full coverage of the Budget and how it affects you on the BBC News website

You will also be able to watch the event on a special programme on BBC Two and the BBC News channel from 11:30 GMT

"If you look at the groups who have been less affected, it is actually those in the upper-middle bits of the distribution, perhaps basic rate taxpayers, where you have a couple who are both earning, particularly those without children," Mr Johnson says.

"They've not been very much affected at all by the tax increases we've seen so far, so he [the chancellor] might decide to go for that group, though electorally that would be difficult."

Households on the lowest incomes have been disproportionally hit by benefits to people of working age and tax credits being raised by less than the rate of inflation.

Of course, income level is not the only way to consider the effects of tax and benefit changes - the IFS also considered types of households.

Chart showing impact of tax and benefit changes on various groups

Clearly it would be tempting to try to get couples with two earners and no children to take on more of the burden, although technically it might be difficult to do so.

Niel Fort, from Bolton

"I'm an unemployed warehouse worker and have been on jobseeker's allowance [JSA] for over a year.

"The cap on welfare rise is a joke because I receive only £50 a week... to feed myself, pay gas and electric, which I cannot afford to do.

"I struggle all the time and yet I am on JSA, which is the benefit for being available for work, fit for work and actively seeking work."

In this analysis, pensioners are among the least hit groups, with a single pensioner's income falling an average 2% and a pensioner couple down 2.3%.

There have been calls for wealthy pensioners to be taxed more, although that would also be politically difficult.

Last year, a report from the Free Enterprise Group of Conservative MPs called for ministers to be "brave enough" to tell the wealthiest pensioners that their benefits would be cut.

They suggested doing things such as taxing winter fuel allowance or even removing it from pensioners who are higher-rate taxpayers.

The chancellor may also decide to ignore income and go for a different group instead.

"He may decide to look at those who have got high levels of wealth, which is actually a bit of a different group to those who have high levels of income, so a mansion tax, for example, for those who have very expensive houses, or looking through things like inheritance tax or capital gains tax," Mr Johnson says.

The idea of a tax on properties worth more than £2m came from the Liberal Democrats, although it is not part of the coalition agreement, but it has now been adopted by Labour.

A vote on it was defeated in the Commons last week.

So, the groups hardest hit by changes in taxes and benefits are those with the highest 10% of incomes followed by the lowest 10%.

The hardest hit types of households are those on working-age benefits, with four of the top five categories being households with nobody working.

Pensioners and working households without children have been hit relatively less hard.


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  • rate this

    Comment number 381.

    341.Straight talk

    "...Even severely disabled peopl walk to the pole, climb mountains etc. so that's not an excuse either..."


    I assume you're not disabled. Yet. Almost everyone becomes disabled before they die, so let's see how you do when it's your turn.

  • rate this

    Comment number 380.


    'NOBODY chooses to be poor'

    'Poor' is relative but I can assure you that, on the introduction of 52% tax, we consciously quit work and down-sized our income by over 90%. And we're not going back to working so hard either.

    A little straw shows the way the wind blows but introducing a divisive 52% tax is the equivalent of a palm tree bent flat in a hurricane.

  • rate this

    Comment number 379.

    Very sloppy presentation by the BBC. The graphs show a fall of minus percentage, any schoolchild knows this would be an increase!
    You can have a fall of 8%, not a fall of -8%.
    Come on the BBC, get your figures correct.

  • rate this

    Comment number 378.

    Thing is really in the end all three of the major parties are quite happy for all this to happen, and more than that because it's not them without work they are quite happy to bring in more migrants while this is going on while leaving a large chunk of the ordinary population confined to benefits and having an awful life to satisfy their greed and bigotry. 9bn+9bn is helpful. Vote UKIP!

  • rate this

    Comment number 377.

    Mass immigration was a cold, calculated and cynical policy by Labour to bring them votes & crush the Far Right"

    The slight flaw in that theory is that immigrants can't vote unless and until they have obtained citizenship, a long costly and complex process. So it certainly didn't and doesn't bring votes. Neither did it bring victory in 2010. What's your next theory?

  • rate this

    Comment number 376.

    My comments get removed reported and voted down because I use the term "Working Class"..They are so frightened of the word because it's a word that UNITES rather than divide.
    They are so frightened of the power of that word and so they should be !
    They pit working people against working people on tax credits.Then People on tax credits against the unemployed.
    Wake UP ! We're being played

  • Comment number 375.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 374.

    I think the multitudes of disabled people in work and partaking in disabled sport are examples that most people should strive for employment. Whilst it is unfair to force certain people to work, I see a lot more dignity from those disabled people who don't have to work, yet nevertheless choose to do so despite the obvious challenges. Many sufferers of internalised illnesses feel the same.

  • rate this

    Comment number 373.

    Predicted share of the vote at the next election:
    con .
    lab ..
    ukip ............................................................................

  • rate this

    Comment number 372.

    I believe the people who are hit the worst are the people on 150K a year. Sure its a good amount of money but they are taxed down to 90K and then you have council tax, car tax and mortgage . This goes down and down until theyre living at about 40k anyway so these people arent rich and people just presume they are and say take more and more of their money which they EARNED.

  • rate this

    Comment number 371.


    Bang on there. The question should be,not how we tax the workers more,but how we get the idle out to work so they are not poor. We also treat disabled people badly in the U.K. I wing commander Bader could fly a spitfire. then many disable could do a productive task. It is all about wanting & willing. for too long the U.K. has taken the lazy way and dished out benefits, look where we are.

  • rate this

    Comment number 370.

    It is clear that as a nation we have problems of a finical nature
    This is due in the most part to the banking crisis of 2008

    It is most important that we all pay for that and the banks must be left to walk away scot free

    That way they can get on with their work which has already started towards the next banking crisis

    Thank you David just what the country needs

  • rate this

    Comment number 369.

    The first chart is the one I see banded about by many a conservative. It is a manipulation of reality and utter rubbish.

    If I lose 10% of 1million pound of income after tax, I still have £450,000 a year.

    If I lose 5% of £20,000 of income after tax, I have £15,300

    So please keep your percentages to yourself. It does NOT reflect reality. The rich and wealthy should pay more!

  • rate this

    Comment number 368.

    This is naive and biassed - as most IFS pronouncements. Whilst the richest are perhaps paying more tax, they have also been in the position to increase their 'earnings' at rates well above inflation. Though a few indivduals may have been hard hit, as a group, the richest still do not pay enough tax.

  • rate this

    Comment number 367.

    333.Bob Roberts

    "Actually, socialism is about dragging everyone down to the lowest level"

    Here's a handy dandy definition for you Bob, just so you have some small understanding of what it is you're criticising:


    Should save any future embarrassment.

    You're welcome.

  • rate this

    Comment number 366.

    Those in government who push for making cuts to the poor and disabled are the same people who turn their noses up at people who beg on the street and just walk on by.

  • rate this

    Comment number 365.

    @341. Straight talk

    That has to be the stupidest comment ever on a HTS. I assume you are trolling?

    NOBODY chooses to be poor

  • rate this

    Comment number 364.

    Because there are plenty of other people who could utilise that spare room. Using housing benefit to pay for an oversized house means the state pays you to occupy a room that could be better used by others.
    Did those international markets force themselves into the treasury and took hostages until Labour gave our taxes to the banks' CEOs? No, the bailouts were given by Labour.

  • Comment number 363.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 362.

    So the poorest and the richest are getting hit. 7.6% of a million might be a lot of money but to a millionaire it's not massive. For the poor, 4.9% of minimum wage is a huge amount.
    Seems that the Gov have taken a tiny bit more in real terms from the very rich, barely touched the incomes of the just ordinary rich and are continuing to make it hardest for the poorest.


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