Office for National Statistics
Using tax data to better capture top incomes in household income inequality statistics
The Office for National Statistics (ONS) yesterday released details of a new method, jointly developed with the Department for Work and Pensions (DWP), that will help produce better estimates of the incomes of the highest paid people.
The new method, which forms part of wider plans to improve income and benefits statistics, uses tax data from HM Revenue and Customs (HMRC) to help adjust the estimates of the highest paid, a group who historically have been less likely to respond to surveys.
The new method increases the estimate of incomes for the top 10%, from £87,700 to £97,600 in the financial year ending (FYE) 2018. In addition, the new estimates increase income inequality by an average of 2.4 percentage points to an average of 34.8% between FYE 2008 and FYE 2018.
The adjustments allow new analyses of income inequality to be produced that show the income share of the richest 1% of people has remained fairly stable at around 7% since FYE 2010.
The new methods help to align estimates from our "Effect of taxes and benefits" and the DWP's "Households Below Average Income".
These improvements will be used for the first time in our Household disposable income and inequality: financial year ending 2019 release.
The full article Using tax data to better capture top incomes in household income inequality statistics can be found in the ONS Economic review and is being discussed at this morning's Economic Forum.
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