Official Statistics

Income Tax, National Insurance Contributions, Tax Credits and Child Benefit Statistics for Non-UK Nationals: 2017 to 2018

Published 27 August 2020

About this release

This official statistics release provides figures for the Income Tax, National Insurance contributions (NICs), tax credits, and Child Benefits paid by and entitled to non-UK nationals for the 2017 to 2018 tax year.

Key statistics for the 2017 to 2018 tax year presented include:

• tax credits entitlement for households with at least one non-UK national
• Income Tax, NICs, tax credits and Child Benefits paid by and entitled to non-UK nationals, by country of nationality
• shares of total income (before and after tax) and Income Tax for non-UK nationals, by percentile groups
• the number of non-UK nationals liable to the higher rate and basic rate of Income Tax

Data sources

Survey of Personal Incomes (SPI), HMRC’s administrative tax credits and Child Benefit data, Migrant Worker Scan (MWS).

Coverage

Nationality is reported by individuals when they registered for a National Insurance number through the adult National Insurance number registration process. If an individual has subsequently naturalised or changed nationality that is not reflected in these statistics.

Throughout this release, UK nationals have been excluded from the European Economic Area (EEA) nationals grouping.

This analysis does not include benefits administered by the Department of Work and Pensions (DWP) nor other taxes paid by individuals such as Value Added Tax (VAT) and business taxes.

What’s new in this publication?

The figures in this publication are now Official Statistics which have been produced by analysts working within HMRC, in line with the values, principles and protocols set out in the Code of Practice for Official Statistics.

This statistical release was first published in August 2016 as Experimental Statistics as they were in still in the development stage. The publication has evolved and from August 2019 was extended to provide statistics for both EEA nationals and non-EEA nationals.

Table D1 now only contains figures for those liable to pay Income Tax. It previously contained figures for those with an Income Tax record which did not fully represent those who were not liable to pay Income Tax.

Key limitations of this analysis

This analysis is restricted to benefits administered by HMRC only, specifically tax credits and Child Benefit. This analysis does not include benefits administered by the DWP.

This analysis only extends to Income Tax and NICs linked directly to the individual’s National Insurance number. It does not include other taxes paid by individuals such as Value Added Tax (VAT) and business taxes. This analysis excludes individuals paying tax using a Temporary Reference Number (TRN) in place of a National Insurance number.

References to nationality are based on the nationality reported by individuals when they registered for a National Insurance number through the adult National Insurance number registration process, no matter how long ago this happened.

Main points

Figure 1 shows the total Income Tax and NICs paid to non-UK nationals in the 2017 to 2018 tax year and the total tax credits and Child Benefit entitled to non-UK nationals in the 2017 to 2018 tax year, broken down by nationality.

The key points to note from figure 1 are:

• European Economic Area (EEA) (non-UK) and Swiss nationals paid £20.7 billion more in Income Tax and NICs than they were entitled to in tax credits and Child Benefit. This is £2.6 billion higher than the previous year
• non-European Economic Area (non-EEA) nationals paid £17.8 billion more in Income Tax and NICs than they were entitled to in tax credits and Child Benefit. This is £2.0 billion higher than the previous year

Figure 1: Income Tax, NICs, tax credits, and Child Benefits paid by and entitled to non-UK nationals in the 2017 to 2018 tax year.

Amount (£ billion)	EEA nationals	Non-EEA nationals
Income Tax	13.1	13.0
NICs	10.7	9.0
Tax credit	2.1	3.2
Child Benefit	1.0	1.0

Figure 2 shows the total Income Tax, NICs, tax credits, and Child Benefit paid by and entitled to non-UK nationals from the 2013 to 2014 tax year to the 2017 to 2018 tax year, broken down by nationality grouping. The underlying data for this figure can be found in the accompanying spreadsheet.

The key points to note from Figure 2 are:

• in the 4 years following the 2013 to 2014 tax year, total payments to HMRC from Income Tax and NICs have increased year on year for both EEA and non-EEA nationals
• the total entitlement from tax credits and Child Benefit has decreased in the 2017 to 2018 tax year for both EEA and non-EEA nationals, this had marginally increased year on year in the previous 4 tax years

Figure 2: Income Tax, NICs, tax credits, and Child Benefits paid by and entitled to non-UK nationals from the 2013 to 2014 tax year to the 2017 to 2018 tax year.

Income Tax, class 1 and 4 NICs, tax credits and Child Benefit payments for non-UK nationals in the 2017 to 2018 tax year

Figure 3 details the total Income Tax and NICs paid by EEA nationals and the total Child Benefit and tax credits paid to EEA nationals in the 2017 to 2018 tax year, broken down by nationality. The underlying data for this figure can be found in the accompanying spreadsheet.

Key points to note from figure 3 are:

• Polish nationals contributed the highest total amount of Income Tax and NICs out of all EEA (non-UK) and Swiss nationals at £3.3 billion, representing around 14% of the total contribution from all EEA (non-UK) and Swiss nationals

• although the Income Tax paid by French, Irish and Italian nationals was higher than that paid by Polish nationals, the NICs paid by nationals from each of these three countries was lower

• as in previous years, Polish nationals had the highest entitlement to tax credits and Child Benefit among EEA (non-UK) and Swiss nationals. Tax credits entitlement to Polish nationals of £586 million represents around 2% of the total entitlement to tax credits for all claimants and around 27% of the total tax credit entitlement for all EEA (non-UK) and Swiss nationals

• restrictions of freedom of movement to the UK from Romania and Bulgaria ended in 2014 and in the years since, the total entitlement to nationals of these nations has increased, with Romanian nationals now having the second highest entitlement to tax credits and Child Benefit among EEA countries

Figure 3: Income Tax, class 1 and 4 NICs, tax credits and Child Benefit payments for EEA (non-UK) and Swiss nationals in the 2017 to 2018 tax year

Figure 4 details the total Income Tax and NICs paid by non-EEA nationals and the total Child Benefit and tax credits paid to non-EEA nationals in the 2017 to 2018 tax year, broken down by nationality. The underlying data for this figure can be found in the accompanying spreadsheet.

Key points to note from figure 4 are:

• Indian nationals contributed the most in Income Tax and NICs of any non-UK nationals at £4.2 billion. This accounted for more than 19% of all contributions from non-EEA nationals

• USA nationals contributed the second highest amount in Income Tax and NICs of non-EEA nationals at £3.1 billion, accounting for more than 14% of contributions from non-EEA nationals

• Pakistani nationals had the highest total entitlement to tax credits at £692 million and the second highest entitlement to Child Benefit at £149 million of any non-EEA nationals

• Indian nationals had the second highest total entitlement to Child Benefit among non-EEA nationals at £119 million and Bangladeshi nationals had the second highest entitlement to tax credits at £311 million

Figure 4: Income Tax, Class 1 and 4 NICs, tax credits and Child Benefit payments for non-EEA nationals in the 2017 to 2018 tax year

Shares of total income (before and after tax) and Income Tax for percentile groups: all migrants and those recently arrived

Figures 5 and 6 show the percentile points of total income before tax for EEA and non-EEA nationals respectively. The underlying data for these figures can be found in the accompanying spreadsheet.

The key points to note from figure 5 are:

• for EEA (non-UK) and Swiss nationals, the bottom 10% of taxpayers had a total income before tax of £13,700 or less. At the upper end of the distribution, the top 10% of taxpayers had a total income before tax of more than £47,700
• for recently arrived EEA (non-UK) and Swiss nationals, the total income before tax was £13,200 for the bottom 10% of taxpayers and £35,300 for the top 10% of taxpayers
• for EEA (non-UK) and Swiss nationals, the mean income before tax was £33,400, compared to £25,500 for those who had recently arrived

Figure 5: Percentile points of total income before tax for EEA (non-UK) and Swiss nationals

ǂ ‘Recently arrived’ covers for the latest 4 years of data available. For the purposes of these estimates, this means that the effective date of arrival is from 6 April 2014 to 5 April 2018 inclusive.

The key points to note from figure 6 are:

• for non-EEA nationals, the bottom 10% of taxpayers had an income before tax of less than £14,200. At the upper end of the distribution the top 10% of taxpayers had an income before tax of more than £68,800
• for recently arrived non-EEA nationals, the total income before tax was £13,700 for the bottom 10% of taxpayers and £72,500 for the top 10% of taxpayers
• for non-EEA nationals, the mean income before tax was £43,200. This increased for those that had recently arrived to £45,500

Figure 6: Percentile points of total income before tax for non-EEA nationals

ǂ ‘Recently arrived’ covers for the latest 4 years of data available. For the purposes of these estimates, this means that the effective date of arrival is from 6 April 2014 to 5 April 2018 inclusive.

Analysis of non-UK nationals according to their highest rate of Income Tax liability

Figure 7 shows the breakdown of non-UK nationals with an Income Tax liability in the 2017 to 2018 tax year, by nationality.

The key points to note from figure 7 are:

• the total number of EEA (non-UK) and Swiss national taxpayers liable to pay Income Tax was 2.2 million. Of these taxpayers 0.2 million were liable to pay Income Tax at the higher rate or additional rate and 1.9 million were liable to pay Income Tax at the basic rate
• the total number of non-EEA national taxpayers liable to pay Income Tax was 1.5 million. Of these taxpayers 0.3 million were liable to pay Income Tax at the higher rate or additional rate and 1.2 million were liable to pay Income Tax at the basic rate

Figure 7: Number of individuals liable to pay Income Tax by highest rate of liability

Nationality	Higher rate or above	Basic rate
EEA	234	1,931
Non-EEA	304	1,174

Methodology

This section provides details on the information, data, and methodology used to produce the statistics, along with their limitations. Part of this analysis is based on a sample, and therefore assumes a rounding convention consistent with corresponding published National Statistics.

Identifying the nationality of individuals

The Migrant Worker Scan (MWS) is a dataset used to identify the nationality and other characteristics of individuals seen to be employees in the HMRC Pay-As-You-Earn Real Time Information (PAYE RTI) system.

The nationality of individuals is taken from National Insurance records and is only available for those who were allocated a National Insurance number via the adult registration process.

For most residents in the UK (including foreign nationals), National Insurance numbers are automatically issued to individuals when they turn 15 years and 9 months. This standard registration process does not collate information on nationality.

Individuals that are not allocated a National Insurance number through the standard registration process (for example, those who come from abroad after the age of 16) have to apply for a National Insurance number through the Department for Work and Pensions’ (DWP) adult National Insurance number registration process. This process records nationality at the point of registration. Subsequent naturalisation (to UK citizenship), other changes in nationality and multiple nationalities are not recorded.

The system records the date when the National Insurance number registration occurred, and also the person’s date of arrival in the UK. The registration date does not represent the date an individual arrived in the UK; it can be some months or even years between arrival and registering for a National Insurance number.

DWP operate the National Insurance number allocation service. Information on the National Insurance system is not intended to be a precise and continuing reflection of an individual’s nationality/citizenship. For more information, see the DWP Official Statistics: National Insurance number allocations to adult overseas nationals entering the UK.

This information is logged with HMRC’s National Insurance and PAYE service. An extract from this system known as the MWS collates National Insurance number, nationality recorded at National Insurance number registration, UK arrival date and National Insurance number registration date.

Recently arrived non-UK nationals

‘Recently arrived’ covers for the latest four years of data available. For the purposes of these estimates, this means that the effective date of arrival is from 6 April 2014 to 5 April 2018 inclusive. The ‘effective date of arrival’ is the earlier of either the National Insurance number registration date or self-reported arrival date. Uncertainty in self-reported arrival date may influence reliability of effective arrival date. As such, it should be noted that this effective date of arrival is an estimate.

Identifying individuals liable to Income Tax and NICs

Information on Income Tax and NICs paid by individuals comes from HMRC’s Survey of Personal Incomes (SPI). The SPI is based on information on individuals who could be liable to UK Income Tax. It is carried out annually by HMRC for a sample of cases and covers income assessable to tax for each tax year. These are the same data used for Personal Incomes National Statistics.

Key data sources for the SPI are:

1. The National Insurance and PAYE service (NPS) system covers all employees and occupational pension recipients with a Pay-As-You-Earn (PAYE) record
2. The Computerised Environment for Self-Assessment (CESA) system covers people with self-employment, rental or untaxed investment income. It also covers those with higher incomes and other people with complex tax affairs. Where people have both NPS and CESA records, their CESA record is selected because it provides a more complete picture of their taxable income
3. The Claims system covers people without NPS or CESA records who have had too much tax deducted at source and claim a repayment

The samples are joined, and the overlap removed. Information about each sample case is recorded including gender, age, income by type, allowances, deductions, tax and NICs. Some item values are imputed where they are not reported in the tax system e.g. interest and dividends for basic rate cases in PAYE.

Based on the reported incomes and allowances, a calculation of the Income Tax liability and Class 1 and Class 4 NIC liabilities is undertaken by applying the rates and thresholds that apply for the tax year.

Income Tax payers are those for whom the calculated Income Tax liability is greater than zero. NICs payers are those who have a non-zero calculated liability to either Class 1 or Class 4 National Insurance.

As the counts and amounts are sample based estimates, values have been supressed for some specific countries where underlying sample counts are low. An entry of ‘-‘ in a table indicates that the data has been rounded down to 0 or has been withheld in line with HMRC’s Dominance and Disclosure policy.

Further information:

• see more information about data sources, methodology and published National Statistics for personal incomes
• see more information about Income Tax; including tax rates, thresholds and what makes up taxable income
• see more information about National Insurance

Identifying tax credits claimants

Tax credits are means tested benefits based on household circumstances. Entitlement is based on a number of factors including age, income and number of children. See further information about tax credits.

Families in receipt of tax credits are identified using HMRC’s administrative tax credits data. This data is used to produce the National Statistics publication Child and Working Tax Credits Statistics: Finalised Annual Awards. This publication relates to the complete retrospective picture for the year based on the finalisation of family incomes and circumstances. This dataset includes the tax credit entitlement and the National Insurance numbers associated with an application.

The number of unique applications in the tax credit data denotes the number of families and has been used to produce Tables A1 and A2. Tables B1, B2, B3, B4, B5, B6, B7 and B8 assess the tax credit entitlement at an individual level. The tax credit entitlement of sole applications has been allocated wholly to the relevant National Insurance number. The tax credit entitlement of joint applications have been split equally between the two associated National Insurance numbers. This enables the analysis to capture the respective individual entitlement of tax credits.

Tables A1 and A2 provide estimates of the number of families broken down by family type. Some families may contain both a non-UK EEA national and a non-EEA national. These families would therefore be counted in both the ‘Families with at least one non-UK EEA national adult’ category and the ‘Families with at least one non-EEA national adult’ category. Estimates for the number of families containing only UK nationals cannot be inferred from the table.

Table A2 breaks down tax credit recipients by out-of-work and in-work families. These are defined as follows:

1. In-work families are defined as being in-work if they are entitled to Working Tax Credit.
2. Out-of-work families are defined as being only entitled to Child Tax Credit, and do not meet the entitlement conditions for Working Tax Credit.

Identifying Child Benefit claimants

Child Benefit is paid to those responsible for children (aged under 16) or qualifying young people. Awards are subject to residence criteria being satisfied. See further information about who can claim Child Benefit.

Families in receipt of Child Benefit are identified using HMRC’s administrative Child Benefit data for 2018. This data is used to produce the National Statistics publication Child Benefit Statistics Geographical Analysis August 2018 by HMRC. The statistics are as close to real time as possible and presents a snapshot as at 31 August 2018, including backdated awards relating to new births.

HMRC’s administrative Child Benefit data only holds the National Insurance number of the main claimant in Child Benefit recipient families and therefore partners in couple families are not taken into account in the analysis.

Glossary of terms

European Economic Area (EEA)

The EEA consists of 28 countries of the EU in addition to Iceland, Liechtenstein and Norway. In this analysis, the UK is excluded. Swiss nationals are treated as EEA nationals for immigration purposes and so are also included in the EEA grouping.

Non-European Economic Area (Non-EEA)

Non-EEA countries exclude all EEA countries identified above and the UK.

Pay As You Earn (PAYE)

PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

Recently arrived non-UK nationals

‘Recently arrived’ covers for the latest four years of data available. For the purposes of these estimates, this means that the effective date of arrival is from 6 April 2014 to 5 April 2018 inclusive.

Survey of Personal Incomes (SPI)

An annual sample survey of individuals who could be liable for income tax derived from HMRC administrative systems holding data on persons within PAYE, SA and income tax claims.

Taxpayer

An individual calculated to have a positive income tax liability for the tax year, based on the income, allowances, reliefs and deductions for the year.

Temporary Reference Number (TRN)

In certain specific circumstances it is not necessary to register for a National Insurance number in order to be employed in the UK, particularly for short periods of time. In this case the individual pays tax through a TRN. See further information about cases where individuals can work in the UK without a National Insurance number.

Contact details

Statistical contacts:

T Curd

M Kippax-Jones

[email protected]

Media contact:

HMRC Press Office

03000 585022

Feedback and questions

We strive to improve the quality and accessibility of our National Statistics. Your feedback is crucial in this process. Outside of the user engagement exercise, we also welcome your suggestions on any of the Statistics and commentary in this publication. If you have any feedback or queries, please contact the statisticians named on this release.