Research and analysis

Intra-UK migration of individuals: movements in numbers and income

Published 24 April 2024

1. Executive Summary

1.1 Background

HMRC have built a new longitudinal dataset covering the incomes and location of UK taxpayers over a 12-year period. This dataset opens new opportunities for novel analysis of the UK tax base. In particular, analysis looking at trends over time of aggregate movements and taxable income.

This dataset was built on the request of the Scottish Government and Welsh Government to help better understand potential behavioural responses, in particular with regard to cross border mobility, with a view to improve the evidence base and inform Income Tax policy in Scotland and Wales.

We have used this dataset to look at the trends in the number of individuals moving between Scotland, Wales, and the rest of the UK (rUK) between the 2009 to 2010 and the 2021 to 2022 tax years. We look at this in both directions of movements, as well as net movements.

Throughout this paper, we refer to the number of ‘individuals’ migrating across borders. Note that only people who had taxable income (including those with income below the Personal Allowance who therefore did not have any Income Tax liability) in both consecutive tax years are included in the estimates for migration between those 2 tax years. For example, an individual must have taxable income in both the 2014 to 2015 tax year and the 2015 to 2016 tax year for a migration to be counted in the 2015 to 2016 tax year. This ensures HMRC holds up to date residency data of the individual in both tax years.

As such, these statistics do not aim to show the level of total migration between Scotland, Wales and rUK. They only tell us about a subset of total migration.

The analysis also looks at the amount of taxable income migrating individuals earned in the year of migration.

This analysis was performed to provide a better understanding of the historic number of individuals migrating within the UK and how this varied with age and income levels.

1.2 Migration between Scotland and rUK

While there were high levels of migration between Scotland and rUK (between 20,000 and 35,000 moving in each direction every year), there were minimal levels of net migration to Scotland (between -1,500 and +1,500) from rUK between tax years ending 2011 and 2017. Beyond year ending 2017, the first year where Income Tax was (partially) devolved, net migration to Scotland increased on a yearly basis, to around 8,000 individuals in year ending 2022. This deviation from the generally stable trend reflects decreasing numbers of taxpayers migrating from Scotland to rUK combined with an increase in migration to Scotland in year ending 2022. Overall, net migration to Scotland was positive in 9 out of the 12 years covered in the dataset.

The net income movement (the amount of taxable income earned by individuals migrating from rUK to Scotland minus the amount of income earned by individuals migrating from Scotland to rUK) was at a deficit between tax year ending 2011 and year ending 2019, averaging around -£60 million, and increased thereafter towards a surplus of around £200 million.

1.3 Migration between Wales and rUK

Both the net migration and net income movements in Wales are similar in magnitude to Scotland, despite having a much smaller population. The migration rate from Wales to rUK is, on average, 80% higher than migration rate from Scotland to rUK. The migration rate from rUK to Wales is similar to the rate from rUK to Scotland.

Overall, Wales exhibited a similar trend in net migration, with numbers fluctuating between around -300 and +1,500 up to tax year ending 2017. Net migration increased in year ending 2017 due to an increase in the number of taxpayers migrating to Wales.

This limited net migration resulted in the net income flowing to and from Wales prior to tax year ending 2020 being small. After the 2019 to 2020 tax year, the increases in net migration led to an uptick in net income flowing to Wales, moving towards around £200 million by the 2021 to 2022 tax year.

1.4 Understanding trends in migration and drawing conclusions

From this analysis, we wanted to understand if there were any obvious factors impacting the trend of migration between Scotland, Wales and rUK.

We saw large increases in net migration to Scotland and Wales during the COVID-19 Pandemic, specifically in tax years 2020 to 2021 and 2021 to 2022.

From this initial analysis, there has been no negative trend in net migration to Scotland in the years following the introduction of the 5 band Scottish Income Tax system in 2018 to 2019.

However, from this analysis alone we cannot draw definitive conclusions about whether migration trends were affected by tax because we do not know the counterfactual – so, we do not know what the level of migration would have been in a theoretical scenario where Income Tax had not been devolved, or where the 5-band system had not been introduced. There may have been factors that increased migration to Scotland unrelated to tax. HMRC have conducted further work to isolate and understand any behavioural effects from this policy change.

1.5 Comparison to other publications and future work

This data in this publication is similar to migration publications produced by the Office for National Statistics ONS and the National Records of Scotland NRS. However, while these statistics only measure migration of individuals with taxable income, the statistics produced by the ONS and NRS measure total migration of all individuals. See section 6 (comparison to other statistics) for more details.

HMRC is currently exploring further research topics using this dataset. We welcome the views of users on this paper and any suggestions for further analysis.

2. Background

The Scottish Parliament has devolved powers to set the rates and thresholds of non-savings non-dividends (NSND) income. The Welsh Parliament has the power to change the rates of Income Tax on NSND income.

2.1 Scotland

Relevant legislation

The Scotland Act 2012 gave the Scottish Parliament the responsibility to set Scottish Rates of Income Tax (SRIT) starting from the 2016 to 2017 tax year.

The Scotland Act 2016 provided the Scottish Government with full powers to control Income Tax rates and thresholds (excluding the Personal Allowance) on NSND income.

Income Tax systems

Scottish Rates of Income Tax: SRIT replaced 10 percentage points of each of the main UK rates of tax for the tax year commencing 6 April 2016. In that year the UK basic, higher and additional rates for NSND income were reduced by 10 pence in the pound for Scottish taxpayers. This reduction was replaced by a Scottish rate set at 10 percentage points, so the overall rates paid by Scottish taxpayers remained the same as elsewhere in the UK. However, in Scotland, 10 pence in the pound went to the Scottish Government and 10 pence, 30 pence and 35 pence went to the UK Government for the basic, higher and additional rate tax bands respectively.

Scottish Income Tax: Following the Scotland Act 2016, the Scottish Government introduced Scottish Income Tax (SIT). This applies to all NSND income of Scottish taxpayers and took effect from 6th April 2017.

For the first tax year, 2017 to 2018, the Scottish Government chose to align the Scottish Income Tax rates to the UK Government rates in the rUK. However, it set the threshold at which a taxpayer starts to pay the Higher rate at £43,000 compared to the UK Government threshold of £45,000. The 2 systems were otherwise identical.

For the tax year 2018 to 2019 the Scottish Government exercised its powers to introduce a new 5-band policy which is different to the UK Government regime. These tax rates incorporated 2 new tax bands: the starter and intermediate rate.

Table 1: Income Tax bands and Income Tax thresholds in Scotland and rUK/Wales in the 2018 to 2019 tax year

Tax Band	Threshold SIT	Tax Rate SIT	Threshold rUK/Wales	Tax Rate rUK/Wales
Starter Rate	£11,850 to £13,850	19%	N/A	N/A
Basic Rate	£13,851 to £24,000	20%	£11,850 to £46,350	20%
Intermediate Rate	£24,001 to £43,430	21%	N/A	N/A
Higher Rate	£43,431 to £150,000	41%	£46,351 to £150,000	40%
Top/Additional Rate	Over £150,000	46%	Over £150,000	45%

See Table 2 below for the current Income Tax rates and thresholds in Scotland, rUK and Wales.

Table 2: Income Tax bands and Income Tax thresholds in Scotland and rUK/Wales in the 2023 to 2024 tax year

Tax Band	Threshold SIT	Tax Rate SIT	Threshold rUK/Wales	Tax Rate rUK/Wales
Starter Rate	£12,571 to £14,732	19%	N/A	N/A
Basic Rate	£14,733 to £25,688	20%	£12,571 to £50,270	20%
Intermediate Rate	£25,689 to £43,662	21%	N/A	N/A
Higher Rate	£43,663 to £125,140	42%	£50,271 to £125,140	40%
Top/Additional Rate	Over £125,140	47%	Over £125,140	45%

The introduction of SIT means that Scottish taxpayers pay different amounts of Income Tax on their NSND income than rUK taxpayers. Some Scottish taxpayers pay less Income Tax than equivalent taxpayers in rUK whilst others will pay more Income Tax than in rUK.

2.2 Wales

Relevant Legislation

The Wales Act 2014 gave the Welsh Parliament the responsibility for setting the Welsh Rate of Income Tax (WRIT) starting from the tax year 2019 to 2020.

Income Tax systems

Welsh Rates of Income Tax: following the Wales Act 2014, the Welsh Parliament introduced Welsh Rates of Income Tax in 2019 to 2020. The Welsh Parliament has not made any changes to the WRIT. WRIT Income Tax bands are therefore identical to UK Income Tax bands, but with 10 percentage points (ppt) of each Income Tax band paid to the Welsh Government.

Both systems are administered by HMRC.

3. Data Sources

We created a new longitudinal dataset for this analysis. This dataset covers 12 tax years, starting at the 2009 to 2010 tax year and ending at the 2021 to 2022 tax year. Each row in the dataset relates to 1 individual. The dataset is built from HMRC’s Pay-As-You-Earn (PAYE) and Self Assessment data. The current version of the dataset was created in May 2023. New versions of this dataset will be created in the future. All data in the current version of the dataset is correct at the time of creation but may change due to data revisions in future versions of the dataset.

3.1 PAYE Data Sources

We extracted PAYE data from HMRC’s Frameworks database. Frameworks data contains information on employees and recipients of occupational pensions. We extracted the amount of taxable income received from employments and occupational pensions for each tax year between 2009 to 2010 and 2021 to 2022. The PAYE income variable does not include income that is handled by HMRC via a change in tax codes such as the state pension.

Prior to the introduction of Real Time Information (RTI) in the 2014 to 2015 tax year, this income information was obtained from end of year P14 submissions. Since the 2014 to 2015 tax year, the income is obtained from Full Payment Submissions FPS.

Note that P14 forms were not required for employees who earned below the Lower Earnings Limit (LEL). However, in their FPS returns employers must include earnings from all employees on their payroll if at least 1 of their employees earns above the LEL. The data relating to those under the LEL will be less complete for tax years prior to the introduction of RTI. This has a negligible effect on the overall trends in the data.

We also extracted residential postcode information for every individual in the Frameworks data for each tax year. The postcodes relate to the location of each individual at the end of the tax year, for example, the postcode extracted for the 2015 to 2016 tax year will be the postcode held by HMRC systems for April 2016. This postcode information can come from multiple sources but will largely be reported by employers in their FPS returns.

3.2 Self Assessment Data Sources

An individual is required to file a Self Assessment return if they meet certain criteria. This is necessary even for individuals who are also present in PAYE if a requirement for filing in Self Assessment is met. Self Assessment returns are generally submitted in the year after the taxable activity has taken place.

To build the longitudinal dataset, we extracted income and postcode data from our Self Assessment systems. The income values extracted for each tax year will cover all taxable income – both non-savings non-dividends and savings and dividends income. The dataset therefore contains 2 income variables for individuals in Self Assessment and with an employment or occupational pension, 1 variable relating to PAYE income only (derived from Frameworks data), and 1 relating to total income (derived from the Self Assessment return).

Historic Self Assessment data is only available for certain points of time. While the vast majority of postcodes extracted from Self Assessment will refer to the value held in April of each tax year, a small proportion will refer to the June after the end of each tax year due to individuals filing their returns late.

3.3 Creating the longitudinal dataset

We combined the data extracted from these 2 data sources to create the final longitudinal dataset. As most Self Assessment filers will also appear in the Frameworks data, when assigning a final postcode to every individual for each tax year, we prioritise using the Frameworks data over the Self Assessment data for consistency.

We then joined our data to the latest available (May 2023) National Statistics Postcode Lookup NSPL table to convert the postcode into a country code for each tax year. There was a small number of records with missing or invalid postcodes which we were not able to convert to a country code. For these records, we tried to impute country codes in 2 ways. Firstly, by using the start of the postcode (for example, all postcodes starting with ‘SW’ are based in England). And secondly, by using the country code from the year before and after if it is the same.

For every individual and for each tax year, the final dataset contains variables showing their PAYE income, their Self Assessment income, their postcode, and their country.

4. Methodology

Once the dataset was built, we carried out analysis to show for each tax year:

1. the number of individuals migrating between Scotland and rUK and between Wales and rUK
2. the amount of income moving between Scotland and rUK and between Wales and rUK

Only people who had taxable income (including those with income below the Personal Allowance) in both consecutive tax years are included in the estimates for migration between those 2 tax years. For example, an individual must have income in both the 2014 to 2015 tax year and the 2015 to 2016 tax year for a migration to be counted in the 2015 to 2016 tax year. This ensures HMRC holds up to date residency data of the individual in both tax years.

As such, these statistics do not aim to show the level of total migration between Scotland/Wales and rUK. They only tell us about a subset of total migration.

This output was extracted on a yearly basis and then aggregated to cover the study period. The number of individuals migrating and the amount of income moving is based on the year of migration. For example, the figures for the 2015 to 2016 tax year show:

1. the number of people who live in a different country at the end of the 2014 to 2015 tax year and at the end of the 2015 to 2016 tax year
2. the amount of income those people earned in the 2015 to 2016 tax year

5. Results

5.1 Key Parameters

The key parameters of this analysis are that:

• an individual is only included within the final results of this analysis if they earned an income during the year before migration and the year of migration

• individuals are grouped into age bands according to their age in the year prior to migration

• individuals are grouped into income bands according to their taxable income during the year of migration. In order for comparisons to be made for migration between Scotland and rUK, we have grouped the starter rate, basic rate, and intermediate rate together and labelled these individuals as ‘basic rate’ for Scottish taxpayers. The lower higher rate thresholds in Scotland from the 2017 to 2018 tax year is still used

• only people who had a valid UK residence (England, Wales, Scotland or Northern Ireland) in both consecutive tax years are included in the estimates

• in the Scottish analysis rUK includes England, Northern Ireland and Wales. In the Welsh analysis, rUK includes England, Northern Ireland and Scotland

5.2 Overall Intra-UK Movement of Individuals

As seen in Figure 1, overall net migration to Scotland from rUK (England, Northern Ireland and Wales) was relatively balanced between the 2010 to 2011 tax year and 2016 to 2017 tax year, with slight fluctuations during this period. The average net migration in this period was positive at around 400 individuals. From the 2016 to 2017 tax year, there was comparatively rapid growth in net migration to Scotland from around 2,000 in 2017 to 2018 to around 8,000 in 2021 to 2022. This was notably strong between 2020 to 2021 and 2021 to 2022 (an increase of just over 95%).

In Figure 2, it is clear that net migration from rUK (Scotland, England and Northern Ireland) to Wales was more stable, with an average of around 700 individuals moving annually over the period between tax years 2010 to 2011 and 2016 to 2017. However, in 2016 to 2017, Wales experienced an uptick in net migration, due to an increase in rUK to Wales migration. Between the 2016 to 2017 and the 2020 to 2021 tax years, this stabilised and this rate of net migration was maintained. A further increase occurred in 2021 to 2022, resulting in net migration to Wales of around 8,000 individuals (an increase of around 67% on 2020 to 2021).

Both Scotland and Wales exhibited higher than usual net migration during the COVID-19 Pandemic, specifically in 2020 to 2021 and 2021 to 2022 (see Figures 1 and 2).

From this initial analysis, there has been no negative trend in net migration to Scotland in the years following the introduction of the 5 band Tax system in 2018 to 2019; in fact net migration to Scotland has increased on the basis of these figures.

However, from this analysis alone we cannot draw definitive conclusions about whether migration trends were affected by tax because we do not know the counterfactual – so, we do not know what the level of migration would have been in a theoretical scenario where Income Tax had not been devolved, or where the 5-band system had not been introduced. There may have been factors that increased migration to Scotland unrelated to tax. HMRC have conducted further work to isolate and understand any behavioural effects from this policy change.

Figure 1: Number of individuals moving to/from Scotland and rUK (England, NI and Wales)

Figure 2: Number of individuals moving to/from Wales and rUK (England, NI and Scotland)

5.3 Overall Intra-UK Movement of Income

We also looked at the amount of taxable income that migrators earned in the year they migrated. In these descriptions, ‘income movements’ refer to the income of migrating individuals in the year of migration. For example, as seen in Figure 3, overall, Scotland showed a negative net income movement for the 2011 to 2012 tax year – this means that the amount of taxable income earned by individuals moving from Scotland to rUK in 2011 to 2012 was greater than the income earned by individuals moving from rUK to Scotland in 2011 to 2012.

Figures 3 and 4 show these income movements between rUK and Wales/Scotland. Both Scotland and Wales maintained a net negative movement of income up to tax year ending 2020 and year ending 2017, respectively. However, Wales did exhibit small net positive amounts for the 2010 to 2011 and 2011 to 2012 tax years.

After the 2018 to 2019 tax year, there were large increases in income moving from rUK to Scotland and Wales. There is an increase of 36% to Wales and 27% to Scotland between 2019 to 2020 and 2021 to 2022. This results in increasing amounts of overall net positive income movements to Scotland and Wales. As with the increase in the number of individuals migrating to Scotland and Wales in recent years, this could be an indirect result of the COVID-19 pandemic.

For some tax years, the direction of net migration and net income movements is different. For example, in tax years ending 2014 and 2015 in Scotland and tax year ending 2013 in Wales. This suggests that the individuals migrating from rUK to Scotland or Wales had lower average incomes in the year of migration compared to the average incomes for individuals migrating in the other direction. This may be partially due to average salaries in rUK being higher than in Scotland and Wales.

As when looking at the number of individuals moving, this initial analysis shows no negative trend in net income migrating in response to the introduction of the 5-band system in 2018 to 2019. In fact net income from intra UK migration transitioned to a net positive following the introduction of the system. The proportion of income moving from Scotland to rUK has remained relatively stable at around 0.9% during the study period (see Figure 18). The same figure for rUK to Scotland flows is around 0.08% (see Figure 19).

However, from this analysis alone we cannot draw definitive conclusions about whether migration trends were affected by tax because we do not know the counterfactual – so, we do not know what the level of migration (and therefore income movement) would have been in a theoretical scenario where Income Tax had not been devolved, or where the 5-band system had not been introduced. There may have been factors that increased migration to Scotland unrelated to tax. HMRC have conducted further work to isolate and understand any behavioural effects from this policy change.

Figure 3: Amount of income moving to/from Scotland and rUK (England, NI and Wales)

Figure 4: Amount of income moving to/from Wales and rUK (England, NI and Scotland)

5.4 Migration of Individuals by Age Group – Scotland

Overall, net migration to Scotland increased for most age groups (aside from the under 25 age band) in recent years, particularly for those aged between 25 and 64.

The lower average net migration of taxpayers to Scotland prior to 2016 to 2017 was due to a comparatively high number of those aged 34 and under migrating to rUK; all other age groups showed net positive migration to Scotland during almost all tax years. However, this was not enough to counter the outflow of those aged 34 and under in some years (see Figure 5).

Figure 5: Net migration of individuals to Scotland from rUK (England, NI and Wales) by age group

5.5 Migration of Individuals by Age Group – Wales

Figure 6 illustrates that all age groups showed increases in net migration to Wales when comparing the 2010 to 2011 tax year to the 2021 to 2022 tax year.

As in Scotland, those aged 34 and under showed the lowest net migration to Wales for almost all tax years.

Figure 6: Net migration of individuals to Wales from rUK (England, NI and Scotland) by age group

5.6 Movement of Income by Age Group – Scotland

Here we see the net deficit in movement of income primarily attributed to those aged 34 and under – though the majority of this is from those aged 25 to 34 in recent years (see Figure 7).

For most age bands, Scotland experienced net positive income movement after the 2019 to 2020 tax year, aside from the 24 and under age group which had a net deficit for all tax years in this analysis. In fact, Figure 7 shows that this age group had a larger net deficit in the 2021 to 2022 tax year compared to the first year of this data in 2010 to 2011.

Figure 7: Net income moving to Scotland from rUK (England, NI and Wales), by age group

5.7 Movement of Income by Age Group – Wales

Figure 8 illustrates the overall negative net income movement away from Wales between the 2012 to 2013 and 2016 to 2017 tax years was due to migration of individuals in the 24 and under and 25 to 34 age groups. Despite this negative net movement overall, the remaining age bands had a net positive movement throughout.

The overall picture transitioned to a positive net movement beyond the 2016 to 2017 tax year across most age groups. The 24 and under age group had a negative net position throughout.

There was strong growth in the overall net income movement to Wales beyond the 2018 to 2019 tax year, due to growth in the positive net income in the 25 to 34, 35 to 49 and 50 to 64 age groups.

Aside from this, the 65 and over age group experienced limited growth in its net position, despite a greater number of rUK taxpayers migrating to Wales than vice versa near the end of the study period (see Figure 6).

Figure 8: Net income moving to Wales from rUK (England, NI and Scotland), by age group

5.8 Migration of Individuals by Income Band – Scotland

We have also grouped individuals by their income band. Note that in order for comparisons to be made for migration between Scotland and rUK, we have grouped the starter rate, basic rate, and intermediate rate together and labelled these individuals as ‘basic rate’ for Scottish taxpayers.

Figure 9 shows most income bands fluctuated around 0 net migration to Scotland until the 2016 to 2017 tax year. From the 2016 to 2017 tax year onwards, we saw higher migration to Scotland for basic rate taxpayers, additional/top rate taxpayers and those with income under the Personal Allowance threshold (though the increases for those under the Personal Allowance are more volatile).

In particular, the migration of basic rate taxpayers is driving the overall increase in net migration to Scotland from the 2016 to 2017 tax year, with net migration increasing from under 1,000 in the 2016 to 2017 tax year to over 5,500 in the 2021 to 2022 tax year.

The migration of higher rate taxpayers between Scotland and rUK was relatively equal in most years, with the general trend being upwards in both directions (see Figures 9 and 11).

It’s worth noting that the higher rate tax band in rUK has a higher threshold than in Scotland, for example, in the 2021 to 2022 tax year, the Scottish higher rate begins at £43,663 whilst, the rUK higher rate begins at £50,000. So, an individual earning £46,000 in rUK would be classed as a basic rate taxpayer here, but a higher rate taxpayer in Scotland.

Although the absolute numbers remained small, there were nonetheless large percentage increases in the number of additional/top rate taxpayers migrating from rUK to Scotland, particularly between 2019 to 2020 and 2021 to 2022 (up around 59% between 2019 to 2020 and 2021 to 2022). Over the same period there was a decrease in the number of additional/top rate taxpayers migrating from Scotland to rUK (down around 6%).

This is evident in Figure 10, which shows that after the 2016 to 2017 tax year the number of Scottish additional/top rate taxpayers moving to rUK each year was less than the number of rUK additional/top rate taxpayers migrating to Scotland.

Overall, these figures show no negative effect in net migration of higher earners due to the changes to the Scottish Income Tax system in the 2018 to 2019 tax year. However, as previously mentioned, as we cannot observe the counterfactual situation where tax divergence did not occur, we cannot conclude the policy change had no effect.

Figure 9: Net migration of individuals to Scotland from rUK (England, NI and Wales) by income band

Figure 10: Number of additional/top rate taxpayers moving to/from Scotland and rUK (England, NI and Wales)

Figure 11: Number of higher rate taxpayers moving to/from Scotland and rUK (England, NI and Wales)

5.9 Migration of Individuals by Income Band (proportions) – Scotland

It is also important to look at the proportions of taxpayers migrating each year. Firstly, the size of the taxpayer populations in each band changes over time. This is often due to fiscal drag where the freezing of Income Tax thresholds results in more individuals paying tax at higher rates. Second, the number of individuals in the additional/top rate band can be very small so while these individuals are the most mobile the absolute number migrating each year is small.

This higher level of mobility is evident in Figure 12 where we see the proportion of additional/top rate taxpayers migrating each year was relatively volatile compared to other bands and fluctuated by as much as 0.3 percentage points (ppts) between years as relatively small change in the number of individuals migrating translates to a large percentage change. In 2015 to 2016 we saw the peak proportion of additional/top rate taxpayers migrating from Scotland to rUK at 1.7%.

Migrations at the basic rate and those below the Personal Allowance maintained quite a stable pattern, only fluctuating by 0.1ppts at most between 2 successive tax years and not differing from the initial proportion by more than 0.2ppts. Within this, the basic rate averaged 0.7% and the those below the Personal Allowance averaged 0.9%.

For rUK to Scotland migrations, shown in Figure 13, the proportion of individuals migrating was relatively stable until the 2019 to 2020 tax year. From the 2019 to 2020 tax year onwards, we saw an increase in the proportion of additional/top rate and higher rate taxpayers migrating to Scotland.

Figure 12: Proportion of individuals moving from Scotland to rUK (England, NI and Wales), by income band

Figure 13: Proportion of individuals moving from rUK (England, NI and Wales) to Scotland, by income band

5.10 Migration of Individuals by Income Band – Wales

As in Scotland, net migration to Wales increased for all income bands compared to the 2010 to 2011 tax year (see Figure 14). The greatest increases were in the basic rate income band, alongside the below Personal Allowance band (although this band shows more volatility).

Figure 15 shows that the number of higher rate taxpayers migrating from rUK to Wales was consistently higher than the number of higher rate taxpayers migrating from Wales to rUK. This gap increased in recent years.

Compared to the 2019 to 2020 tax year, the number of additional rate taxpayers migrating from rUK to Wales increased by 79% in the 2021 to 2022 tax year. The number of additional rate taxpayers migrating from Wales to rUK also increased by 58%, so the net effect has been slightly dampened. This is shown in Figure 16.

Figure 14: Net migration of individuals to Wales from rUK (England, NI and Scotland), by income band

Figure 15: Number of higher rate taxpayers moving to/from Wales and rUK (England, NI and Scotland)

Figure 16: Number of additional/top rate taxpayers moving to/from Wales and rUK (England, NI and Scotland)

5.11 Migration of Individuals by Income Band (proportions) – Wales

The proportion of individuals migrating from Wales to rUK was noticeably higher than the equivalent proportions for Scotland, around 1.5% compared to under 1.0%.

Figure 17 shows that, like Scotland, individuals in the additional rate tax band were the most mobile and had the most volatility year to year, with variations of as much as 1ppt between 2 successive tax years (2.5% in the 2018 to 2019 tax year and 1.5% in the 2019 to 2020 tax year).

The proportion of basic rate and higher rate individuals migrating to rUK remained relatively stable across the time series, at around 1.8% and around 1.3%, respectively.

Similarly to migrations from rUK to Scotland the proportion of individuals migrating from rUK to Wales was relatively stable until the 2019 to 2020 tax year, at around 0.08%.

Between the 2019 to 2020 tax year and 2021 to 2022 tax years, we saw an increase in the proportion of rUK taxpayers of all income bands migrating to Wales. This can be seen in Figure 18.

Figure 17: Proportion of individuals moving from Wales to rUK (England, NI and Scotland), by income band

Figure 18: Proportion of individuals moving from rUK (England, NI and Scotland) to Wales, by income band

5.12 Movement of Income by Income Band – Scotland

As previously stated, the net deficit in income movement was maintained for Scotland through to 2019 to 2020. The magnitude of the net deficit fluctuated substantially each year, from between around -£135 million to around -£4 million.

In years where a deficit occurs, Figure 19 shows there was significant variability in how much individuals with different levels of income contribute. For example, from 2010 to 2011 to 2012 to 2013 basic rate taxpayers contributed the majority of the deficit whilst in 2013 to 2014 and 2016 to 2017 higher rate taxpayers were the largest contributor to the deficit, while additional/top rate taxpayers contributed the majority of the deficit in 2014 to 2015.

However, after the 2019 to 2020 tax year, basic rate taxpayers contributed the majority of the surplus in net income.

Most tax bands exhibited growth in net income movements after the 2019 to 2020 tax year, with the greatest growth in the basic rate at around £102 million between 2019 to 2020 and 2021 to 2022.

However, the band for those earning less than the Personal Allowance remained at a net deficit. As no Income Tax is due for income under the Personal Allowance, this would not necessarily translate to a loss of tax revenue.

The movement of higher rate taxpayers’ income increased for both Scotland to rUK movements and rUK to Scotland movements throughout the study period. However, the net position for Scotland fluctuated between a deficit and surplus on multiple occasions between tax years ending 2011 and 2022. In recent years the position remained as a surplus, with the most recent figure (2021 to 2022 tax year) being around £38 million.

Figure 19: Net income moving to Scotland from rUK (England, NI and Wales), by income band

Figure 20: Proportion of Total Income migrating from Scotland to rUK, by income band

Figure 21: Proportion of total income moving from rUK to Scotland, by income band

5.13 Movement of Income by Income Band – Wales

Unlike the net positive migration of individuals, Wales exhibited net negative income movements up to the 2016 to 2017 tax year. Figure 22 shows that this can largely be attributed to the basic rate income band and those earning below the Personal Allowance threshold.

This disparity in net positions with respect to individuals and income may be explained by differences in earnings of individuals migrating to rUK and individuals migrating to Wales. For example, the average higher rate individual migrating to Wales may earn less than the average higher rate individual moving to rUK (given disparities in average incomes in each source country).

The transition towards a strong net positive position from the 2017 to 2018 tax year was largely due to increases in net income movements in the basic and higher rate income bands.

Figure 22: Net income moving to Wales from rUK (England, NI and Scotland), by income band

Figure 23: Proportion of Total Income migrating from Wales to rUK (England, NI and Scotland), by income band

Figure 24: Proportion of total income moving from rUK (England, NI and Scotland) to Wales, by income band

6. Comparison to Other Statistics

There are other publications which show similar statistics to this publication. It is important to understand how these other statistics relate to what is being released here and highlight differences in coverage or data used to compile each set of statistics.

Both the National Records of Scotland and the Office for National Statistics publish statistics on migration between Scotland and the rest of the UK.

The NRS and ONS collaborate when producing these statistics so that the overall figures of migration match. The ONS also publishes statistics on migration between Wales and the rest of the UK. These statistics are not directly comparable to the figures published in this paper for a few reasons:

1. The statistics are measuring different things. The ONS and NRS statistics aim to measure total migration while our figures only include individuals with taxable income (see section 4 for more details).
2. The statistics are based on different data sources. The ONS and NRS statistics are primarily based on data relating to NHS GP registrations while our figures are based on HMRC tax administrative data.

This means that some migrations that are recorded in the ONS and NRS statistics will not be recorded in these statistics. For example, an individual moving from Scotland to England who did not receive an income before moving.

7. Future Work

HMRC intends to perform further statistical analysis to develop a sounder knowledge base of underlying trends within the Scottish and Welsh taxpaying population.

This should provide accurate and up to date data to assist policy makers across the devolved administrations and the UK government in making make effective policy decisions.

We welcome user feedback on this analysis and possible relevant topics for further research on the Scottish and Welsh taxpaying population.

You can contact us at [email protected]

8. Acknowledgements

The analysis presented in this report would not have been possible without the input of colleagues both within and outside of HM Revenue and Customs (HMRC). In particular we think the input from officials in the Scottish Government, the Welsh Government, and the Scottish Fiscal Commission.

Authors: O. McWilliams-Cummins; S. Warr; N. Duncan.