Londoners have been hit with a record £71billion annual income tax raid by the Treasury, the Standard reveals.
New figures show how “stealth” income tax rises are clobbering the capital as hundreds of thousands of Londoners are dragged into paying higher rates.
The overall bill for the capital has jumped from £63.8billion a year to £71.1billion in 2023/24, the latest available figures.
Londoners in just four boroughs now pay more in income tax than the whole of Scotland.
They are Kensington and Chelsea with a bill of £5,480,000, Westminster (£4,940,000), Camden (£4,730,000) and Wandsworth (£4,700,000), a total of £19.8 billion compared to Scotland’s £18.5 billion.
London’s commuter belt and wider South East paid nearly £50billion in income tax a year.
The Centre for London stressed that less that £1 in every £10 that Londoners pay in taxes stays in the city as it “bankrolls” the rest of the country.
In New York, the Mayor keeps $5 (£3.70) for the city in every $10 (£7.40) raised locally, it added.
Antonia Jennings, chief executive at the Centre for London told The Standard: “For decades, the capital has been the biggest contributor to the Treasury, helping fund public services and investment across the country.
“London’s role is vital and should continue.
“But London’s productivity is stagnating, and too many Londoners are living in poverty.
“The gap between London’s tax contribution and living standards is neither sustainable nor acceptable.”
The sharp rise in London’s bill is significantly due to a freeze on the thresholds for paying income tax imposed by Rishi Sunak, as Chancellor in 2022/23.
The following year, the number of income tax payers in London jumped by 250,000, from 4,570,000 to 4,820,000, and has continued rising to well over five million.
In 2023/24, the number of 40p higher rate tax payers spiralled by 90,000, from 1,020,000 in the previous year to 1,110,000, and has since gone up to around 1.3 million or more.
More people were also dragged into paying the basic rate of income tax, with a rise of 90,000, or from 3,270,000 in 2022/23 to 3,360,000 the following year.
The number of Londoners paying the additional 45p rate jumped by 98,000 over this one-year period, from 197,000 to 295,000 and has since risen to well over 340,000.
The “stealth tax” freeze continued under other Conservative Chancellors including Jeremy Hunt, Kwasi Kwarteng and Nadhim Zahawi, who has now defected to Reform UK.
Chancellor Rachel Reeves announced in her Budget last year, after much speculation that she would break Labour’s manifesto to increase the income tax rate, that she was instead extending the freeze by a further three years until April 2031.
The move is forecast to rake in an extra £3.1billion for the Treasury in 2028/29, rising to an additional £11.6billion in 2030/31.
The three-year extension will bring 700,000 individuals into income tax by 2030/31, according to forecasts, compared to if these thresholds were indexed in line with inflation from 2028/29 onwards.
Luke Taylor, Liberal Democrat London spokesman and MP for Sutton and Cheam, said: "These figures reveal the staggering scale of the Conservatives' stealth tax swindle, which has hammered hardworking families for years.
"By refusing to end the freeze, Labour continues the Conservative hit on the pay packets of working Londoners.”
People are dragged into paying more to the Treasury by the “stealth tax” as their income rises, but the thresholds remain frozen.
The more wages, and other income, rise the greater the tax grab from the Government.
With inflation having hit 11.1% in October 2022, after the cost of energy soared due to Vladimir Putin’s invasion of Ukraine, wages also increased more sharply than they would normally have done.
This led to the “stealth” tax biting even harder into people’s income.
