Households in London and the South East of England are contributing 45 per cent of Britain's total income tax bill, an analysis shows. 

In 10 years, households in London have seen their share of Britain's total income tax bill surge by 80.7 per cent, from £35.3billion to £63.8billion according to data from accountant UHY Hacker Young. 

That is according to figures from the 2022-23 tax year, the latest for which local authority-level data is available.

Residents in London's well-heeled Kensington and Chelsea borough forked out the most in income tax, averaging out at around £73,800 per person in the area who pays the tax. The UK average was about £7,000 a year.

See how much people in your area pay using map below, and the full list at the end of this article.  

According to UHY Hacker Young's analysis of HM Revenue & Customs data, residents in London accounted for just over a quarter of all income tax paid in the period. 

How much people in different locations contribute to Britain's income tax bill is depends on a range of factors, such as average wages in the area and population density. 

London and the South East of England, UHY said, consistently contributes a larger share of income tax than elsewhere as it is home to a 'disproportionate' number of higher earners paying income tax at the 45 per cent rate. 

UHY's analysis of HMRC data found that residents in the London borough of Wandsworth paid £4.26billion in income tax in the period. This was more than in Leeds and Birmingham combined. 

The London borough of Hackney contributed £1.54billion in income tax in the relevant tax year, against £1.35billion across Glasgow in Scotland. 

Residents in the City of London, Westminster, Camden, Elmbridge and Richmond upon Thames also shelled out a disproportionately high sum towards Britain's 2023-23 income tax bill. 

While London and Surrey dominated the top 10, residents in St Albans also contributed a sizeable sum to the Treasury's income tax coffers in 2022/23, at around £18,400 per tax-paying resident, UHY said. 

At the other end of the spectrum, residents in the sparsely-populated Orkney Islands contributed £49million to the 2022-23 income tax bill. 

In Boston, Lincolnshire, residents contributed a total of £122million to Britain's £240.7billion 2022-23 income tax bill, according to UHY. Contributions in locations such as Ceredigion, Burnley, Pendle, Hyndburn, Eden, Clackmannanshire, Richmondshire and Torridge were also on the lower side. 

According to the analysis, residents in Blackpool paid, on average, the lowest level of annual income tax in the period per person, at around £2,890. Meanwhile, in Burnley, the average contribution per tax-paying resident was £3,080 by the end of the tax year. 

Again, average wages in the location in question will determine average levels of income tax paid in the area. 

 How does income tax work? 

Income tax is a progressive tax system, meaning that the more you earn, the higher the rate.

For most people, income tax comprises makes the largest portion of the taxes they will pay over their lifetime. 

Income tax is charged on earnings from employment and self-employment, but also any state and private pension income, rental income or savings interest if it takes you above the £12,570 basic rate threshold. You may also have to pay income tax on certain benefits. 

The highest rate of income tax you pay will depend on your earnings and the tax band you fall into.

The official tax rates for England, Wales and Northern Ireland are 20 per cent for income between £12,571 and £50,270, 40 per cent on income between £50,271 and £125,140, and 45 per cent on anything above that. Scotland has different rates and a top rate of 48 per cent. 

Income tax is paid on anything over the personal allowance of £12,570. 

However, not everyone gets a personal allowance. For those who earn more than £100,000, the personal allowance is cut by £1 for every £2 earned over the limit, until it is removed entirely at £125,140.

In November's Autumn Budget, Rachel Reeves announced that income tax thresholds would be frozen until the 2030-31 tax year.  

Freezing tax thresholds results in 'fiscal drag', a phenomenon where people are dragged into higher tax bands when they get pay rises, even though the real-terms value of those salaries is falling due to inflation. 

Tax thresholds have not kept up with the cost of living, since former Chancellor Rishi Sunak froze them at 2021 levels at the tail end of the Covid-19 pandemic. 

UHY partner Neela Chuahan, told This is Money: 'London and the South East now account for almost half of the UK’s entire income tax take. 

'Obviously, that reflects the sheer concentration of high earners in the South-East but it also reflects years of tax policy geared towards shifting more of the tax burden onto higher earners.'

Chauhan added: 'Freezing allowances and lowering the additional-rate threshold has pulled ever more taxpayers into higher bands, driving a sharp rise in revenues from London in particular – up more than 80 per cent over the past decade.

'While this underlines how dependent the exchequer has become on London and the South East, it also raises concerns about the long-term competitiveness of the UK tax system and the risk that persistently higher tax burdens could push some high earners to relocate abroad or reduce their economic activity.

'Anecdotal evidence suggests that this is happening and that the shift of taxes on to the higher earners has got to the point that it is detrimental for the UK economy.'