Accredited official statistics

Personal Incomes Statistics 2019 to 2020: Supporting Documentation

Published 16 March 2022

1. Background information

This is a National Statistics publication produced by HM Revenue and Customs (HMRC). For more information on National Statistics and governance of statistics produced by public bodies please see the UK Statistics Authority website.

The tables in this publication provide detailed breakdowns of individuals liable to UK Income Tax (taxpayers) and their incomes using sample based estimates.

2. What is the Survey of Personal Incomes?

The Survey of Personal Incomes (SPI) is based on information held by HMRC on individuals who could be liable to UK Income Tax. It is carried out annually by HMRC and covers income assessable to tax for each tax year.

3. Uses of the SPI

The SPI is compiled to provide a quantified evidence base from which to cost proposed changes to tax rates, personal allowances and other tax reliefs for Treasury Ministers. It is used to inform policy decisions within HMRC, the Treasury and the Devolved Administrations, as well as for tax modelling and forecasting purposes. In addition, it is used to provide summary information for the National Accounts that are prepared by the Office for National Statistics. Finally, it is used to provide information to Members of Parliament, other Government Departments, companies, organisations and individuals.

4. Sample Design

HMRC holds information about individuals who could be liable to UK Income Tax in two operational computer systems.

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.

Separate samples are drawn from these systems and then joined together to create the SPI.

For more information about how the SPI is constructed, its coverage and methodological changes from previous SPIs, please see the data sources and methodology section below.

5. What does this publication tell me?

The tables in this publication provide detailed statistics about individuals liable to UK Income Tax (Income Tax payers) and their incomes using sample-based estimates. They provide detailed information based on gender, age, income source, income by source and tax distribution.

The tables in this release exclude individuals who are not Income Tax payers, which may occur if the individual has no Income Tax liability due to their deductions, reliefs and Personal Allowances exceeding their total income, if their income is below their Personal Allowance, or if they do not current have any income.

Tables are based on a sample of administrative data for the relevant tax year. Income Tax liabilities are modelled using the HM Revenue and Customs Personal Tax Model. Methods used to calculate Income Tax liabilities are described in the supporting documentation accompanying the Income Tax Liabilities Statistics.

6. Who might be interested?

These tables would be of interest to policy makers in government, academics, journalists, think tanks, and other research bodies. They would be of use to individuals or organisations interested in the distributions of numbers and amounts of personal incomes, for example by taxpayer marginal rate or income band. Users may also like to view the tables on Income Tax Liabilities.

7. User engagement

We are committed to providing impartial quality statistics that meet our users’ needs. We encourage our users to engage with us so we can improve our Official Statistics and identify gaps in the statistics that we produce.

Comments or queries on these statistics can be sent to the statistical contacts named at the end of this section, or through the feedback form link below. We will review user comments and use this information to influence the development of our Official Statistics. Contact us

8. Publication and revision strategy

The SPI statistics are published annually, usually in February/March. The exact date of publication will be announced no less than four weeks before publication. This date and any subsequent changes to this date will be announced on the HMRC’s statistics announcement webpage.

9. Statistical contacts

Enquiries about these statistics should be directed to the statisticians who are responsible for this publication:

Statistical contact: M Whent, [email protected]

Any media enquiries should be directed to the HMRC Press Office contacts below:

Media contact: HMRC Press Office, [email protected]

10. Data Sources and Methodology

The data sources and methods used to compile the statistics in this release are set out below:

The SPI is based on information held by HMRC on persons who could be liable to UK Income Tax for the Income Tax year. It is carried out annually and covers the income assessable for tax in each tax year. The tables in this publication are based on the surveys for tax year 2019 to 2020 and earlier.

Samples were selected from two HMRC operational computer systems, which are as follows:

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 directors, those subject to higher rate tax 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

Some individuals with a PAYE record are also in the SA system. These individuals are excluded from the PAYE population prior to sampling, as their SA record provides a more complete picture of their taxable income. Separate samples were drawn from each of these systems and different sampling strategies were used for each. The samples were structured as follows:

• the PAYE population from NPS was stratified by gender and by the sum of pay plus occupational pension income for the previous tax year. Where the previous year’s income was not available, cases were stratified by gender and by whether they were a higher rate or additional rate taxpayer for the current tax year based on information available at the time the sample was drawn. The sampling fractions varied from 1 in 8 for individuals with high incomes and rare allowances to about 1 in 150 for people with low combined pay and pensions. In all, about 410,000 individuals were selected from NPS for inclusion in the SPI for tax year 2019 to 2020.

• for the Self Assessment population from CESA, the main source of income (self-employment or employment/ occupational pension) and ranges of income and tax were used to stratify the sample, with the sampling fraction varying from 1 in 1 for cases with very high income or tax up to around 1 in 249 for employees and occupational pensioners with smaller income or tax. In all, about 413,000 individuals were selected from SA for inclusion in the SPI for tax year 2019 to 2020.

Once data was collected for the two constituent parts of the sample, the data sets were joined together. After allowing for non-response and for records that failed data validation tests, there were around 822,000 valid cases in the final SPI dataset for tax year 2019 to 2020.

Coverage of the SPI

Not all of the individuals in the SPI sample are taxpayers. About 22 per cent of sample cases (35 per cent grossed) have no Income Tax liability because deductions and reliefs and personal allowances exceed their total income. The National Statistics in this publication - with the exception of tables 3.9 and 3.10 - only cover individuals liable to UK Income Tax (taxpayers) and their incomes.

An individual with income below the personal allowance can still be a taxpayer in some circumstances. This can arise where individuals who have income liable to UK tax do not qualify for a personal allowance under the residence and/ or domicile rules. Some people who do qualify for the personal allowance choose to give up their personal allowance as part of the qualifying conditions for having their income taxed under the “remittance basis”. These taxpayers may only have a small amount of income liable to UK tax (i.e. below where the personal allowance is set), but this income is still liable to tax and is charged at the starting, and/ or basic rates.

Most sources of income are liable for Income Tax and adding all these sources together will give an individual’s total income assessable for tax for the tax year. There are some sources of income that are not liable for tax. As they do not contribute towards an individual’s taxable income; they are excluded from the SPI. These sources include some social security benefits and income from some tax efficient savings vehicles (e.g. Individual Savings Accounts and some National Savings & Investment products).

Capital Gains arising from the disposal of assets are subject to Capital Gains Tax (CGT) and are not treated as income for Income Tax purposes, so gains from the disposal of assets are not included in the SPI.

The coverage of investment income for the sample drawn from NPS is incomplete. In order to create a full picture of total income for this survey, it is necessary to impute values of dividends to some sample cases. For the dividends imputation, the amount for each SPI case:

• is known for cases in Self Assessment from the amount declared on the Self Assessment Return

• can be inferred or estimated reasonably for NPS cases where there is an adjustment to the tax code for taxpayers

• is unknown for NPS cases where there is no coding adjustment

Where no information at case level is available from HMRC administrative systems, estimated values are imputed to cases so that the population as a whole has amounts consistent with evidence from other sources.

Starting from control totals at UK level for the number of cases and total amount of dividends, the Self Assessment and NPS cases with coding adjustments are deducted to leave targets for the remainder of the taxpayer population. These targets are at UK level – no attempt is made to control the targets to sub-UK geographical units. The cases to which amounts are attached by the imputation process and the amounts attached are determined by probabilistic methods with just the UK targets and distributions in mind. For dividend income, the number of non SA cases with dividend income and distribution of imputed amounts were inferred from Family Resources Survey data for tax year ending 2020.

HMRC does not have complete information about pension contributions. Pension contributions can be made under two types of arrangement:

• net pay schemes

• relief at source schemes

HMRC holds information on the value of employee pension contributions paid under “net pay arrangements” in Real Time Information (RTI) submissions by their employer. The data have been used to match SPI cases to “net pay” pension contributions. Pension schemes operating a net pay scheme are occupational pension schemes. However, some employers operate group schemes (“master trusts”), and some of these are not net pay schemes and thus will not be included in the net pay group.

Relief at basic rate is given at source for individual (and/or employee) contributions to personal pensions, and to employees in group schemes (“master trusts”; when not operated on a net pay basis). These types of scheme are referred to as “relief at source” (RAS) schemes. Since the basic rate tax relief is given automatically, HMRC does not need to collect RAS pension schemes’ data for this group of taxpayers. To compile complete estimates for RAS pensions and total income for the SPI, a significant proportion of the amount of RAS pension contributions has been estimated using data from external data sources. The estimated value for this and for net pay contributions has been combined with other pension reliefs and included in these statistics.

More information on the imputations process can be found in the supporting documentation accompanying the latest Income Tax Liabilities Statistics

11. Estimates and measures of precision

Population and sample design

The SPI aims to cover all individuals with a UK Income Tax liability. The sample drawn from HMRC operational computer systems will include some cases where income is less than allowances so no tax liability arises. The section above explains how the records in each operational computer system are grouped (stratified) before the sample is selected. A random sample of records is drawn from each grouping (stratum) – the proportion of cases selected varies from stratum to stratum.

Reliability of estimates

As with all sample surveys, estimates from the SPI have a sampling error attached to them. A statistic (e.g. an estimate of a mean or a total from a random sample) will be subject to sampling variation – its value will vary from one sample to the next if repeated random samples are drawn. The Standard Error of the statistic measures the extent of the variability. It reflects how much spread exists in the observations from the sample and the size of the sample.

In general, the larger the sample size, the smaller the Standard Error. To a lesser extent, the standard error of the statistic will decline as the proportion of the population surveyed increases, but only by taking measurements for the whole population can sampling error for the statistic be removed entirely.

A Confidence Interval for the statistic is constructed from the Standard Error. It gives an estimated range of values which is likely to include the estimated population size statistic. If independent samples are taken repeatedly from the same population and the Confidence Interval is calculated for each sample, then a proportion (known as the Confidence Level) of such intervals will include the unknown population parameter.

A 95% Confidence Interval is one that if compiled repeatedly would encompass the population parameter 19 times in 20. For a given sample size, narrower intervals can be compiled if a greater risk of failing to encompass the true population value is acceptable, whereas if greater certainty of including the true value is required, the interval will be wider.

The Upper and Lower boundaries of the Confidence Interval are called the Confidence Limits. They are a function of the statistic, the Standard Error of the statistic and the degree of confidence required of the interval.

The calculation of sampling errors assumes a simple random sampling method but can be extended to more complex sample designs. The sample for the SPI, as described earlier, is selected using a stratified sample.

12. Precision of estimates: sub UK areas

The population is not stratified by geographical area before the SPI sample is selected. Estimates of taxpayer numbers for low level geographical areas of the UK depend on measuring the proportion of the UK population which belong to the area. Typically these proportions are very small and to ensure high precision for any estimated proportion, the sample size across the UK needs to be large.

The table below gives an indication of the level of precision which may be assumed, with 95% confidence, for an estimate of taxpayer numbers from a simple random sample as large as the SPI. It shows that for estimated populations of 2.5 million or more, the estimate will be within 1% of the true population with 95% confidence.

As the estimated population falls, the 95% Confidence Interval increases in size relative to the estimate (far right column). For a typical Parliamentary Constituency with an estimated taxpayer count of 46,000, the true figure may lie between 42,000 and 50,000. The error could be +/- 8% of this estimate. For a large Parliamentary Constituency, the error may be about 4,000 (7% of the estimate), while for a small constituency, the error may be 3,000 (about 9%).

Table 1: Survey of Personal Incomes: Confidence Intervals for estimates of taxpayer numbers

Geographical area	Estimated value	Confidence Limits (lower)	Confidence Limits (upper)	95% Confidence Interval (+/-)	As % of estimate
		Lower limit	Upper limit
	Number (000s)	Number (000s)	Number (000s)	Number (000s)
Government Office Region (medium)	2,500	2,475	2,525	25.0	1.00%
County (large)	500	488	512	11.6	2.32%
County (small)	200	193	207	7.4	3.69%
Parliamentary Constituency (large)	57	53	61	4.0	6.93%
Parliamentary Constituency (medium)	46	42	50	3.6	7.72%
Parliamentary Constituency (small)	34	31	37	3.1	8.98%

Note to table 1: Assumes a taxpayer population of 29 million and a simple random sample of 400,000.

In practice, estimates will reflect the more complex SPI sample design.

Broadly speaking, as sample size changes by a factor x, the Confidence Interval will change by a factor, so a fourfold increase in sample size will halve the Confidence Interval.

Year on year changes in published estimates of taxpayer numbers within small geographical areas (e.g. districts and constituencies) should be viewed with caution. They involve measuring small differences between two very small proportions. The Confidence Interval for the difference could be large relative to the measured difference, so any observed change may be due to sampling fluctuation alone.

Similar precision, or relative precision, to that shown in the table above in estimates for subsets of taxpayers (e.g. pensioners or higher rate taxpayers) in small geographical areas (e.g. districts and constituencies) requires even greater national samples, far in excess of the present sample size of the SPI. Estimates in such detail are not considered sufficiently reliable to be published.

13. Methodological Changes this year

Changes to the PAYE Data

Bank and building society interest

Since the tax year 2018 to 2019, data on interest from banks and building societies have been received through NPS data and no longer estimated through imputation. In the tax year 2019 to 2020 there were two uploads of bank and building society data due to some banks and buildings societies submitting information late. There was only one upload of data for the previous tax year 2018 to 2019.

Changes to the Self Assessment Data

Changes to the Self Assessment sample

The Self Assessment sample has been increased to improve precision at the higher end of the income distribution. The high-income threshold for which cases are sampled with a rate of 1 in 1 has been lowered, resulting in an increase of around 50,000 extra sample cases. The focus of this review is in response to feedback from key users of these statistics, such as the Scottish Fiscal Commission who have found differences in the Scottish Outturn and SPI statistics on additional rate taxpayers. This is discussed in their 2018 Forecast Evaluation Report, (pages 9 to 11).

The impact of this change in sampling methodology has resulted in consistent figures at the higher end of the income distributions with the respective Outturn publications. The residual differences between the Outturn and SPI statistics will be due to a combination of methodological differences (as outlined in section 14) and the precision of the cases not sampled with a rate of 1 in 1.

Table 2: Tax on earnings (£ millions) at the higher and additional rates for additional rate taxpayers in Scotland and Wales

Please note that the figures calculated on the previous sampling methodology are indicative and provide an illustration of the possible impact of moving from the previous methodology to the current methodology.

Taxpayer region	Tax band	Previous sampling methodology	Current sampling methodology	From respective Outturn publication
Scotland	Higher rate	758	749	743
	Additional rate	1,230	1,160	1,150
Wales	Higher rate	184	184	184
	Additional rate	203	216	204

Restricting finance cost relief for individual landlords

Landlords are no longer able to deduct all of their finance costs from their property income to arrive at their property profits. Instead, they receive a basic rate (20%) reduction from their Income Tax liability for their finance costs. In tax year 2019 to 2020 deductions for finance costs were restricted to 25%, therefore the property income that was subject to tax in these tables is higher than in previous years. The remaining 75% of finance costs are given tax relief at basic rate which is accounted for in the total tax liability.

Further information on the policy changes can be found here:

Changes to tax relief for residential landlords

Changes to tax relief for residential landlords: how it is worked out

Changes to the Imputation Process

Changes to the Claims Data

Claims data are no longer imputed (see below). There have been no other changes to imputations. A separate sample of Claims data for individuals with no live employment is no longer included.

For operational efficiencies R40 Claim forms (for refunds of Income Tax deducted from savings and investments) were migrated onto the National Insurance and PAYE system (NPS) in the tax year 2016 to 2017. Claims cases are included in the NPS component of the survey for individuals with an active employment for at least 1 day. However, the NPS data available excluded Claims cases which have no active employment, as such the Claims component for these individuals was previously based on imputation.

Since April 2016, Income Tax on bank and building society interest is, in most cases, no longer deducted at source. R40 forms can only be submitted four years after the end of the tax year an individual is claiming for, therefore excluding the claims data for cases with no live employment will have a minimal impact on the published estimates. The majority of Claims cases (over 96% of the tax year 2015 to 2016 Claims population) were non-taxpayers and therefore excluded from the statistical tables in this publication.

14. Devolved Income Tax Tables

Tables 3.16 and 3.17 reflect the devolution of Income Tax to Scotland and Wales. They show estimates constructed from the SPI of the amount of tax that is due from non-savings/ non-dividend (NSND) income, that is, “earned income”.

Background to devolved Income Tax

Scottish Rates of Income Tax (SRIT)

The Scotland Act 2012 gave the Scottish Parliament the power to set a Scottish rate of Income Tax. The Scottish Rate of Income Tax (SRIT) regime applies to non-savings non-dividend (NSND) income. It allows the Scottish Government to change the amount of Income Tax that Scottish taxpayers pay and, as a result, the amount that the Scottish Government had to spend in Scotland. The Scotland Act 2016 enhanced the Scottish Parliament’s tax powers, devolving all NSND income and allowing the Scottish Parliament to set and change its own tax rate bands and limits (but not the Personal Allowance) and introduce new ones. These enhanced powers were introduced from 6 April 2017. In 2018 to 2019, SRIT was changed to introduce two new tax bands, the starter rate (19%) and the intermediate rate (21%) either side of the basic rate (20%). The higher and additional rates of tax were also increased by 1% for Scottish taxpayers increasing from 40% and 45% to 41% and 46% respectively. These rates remain the same in the 2019 to 2020 tax year. The higher rate threshold for the rest of the UK (rUK) increased to £50,000 in the 2019 to 2020 tax year but remained unchanged at £43,430 for Scotland. HMRC publishes statistics in the Scottish Income Tax Outturn.

Wales Rate of Income Tax (WRIT)

From April 2019, the UK government reduced each of the three main rates of income tax – basic, higher and additional rate – paid by Welsh taxpayers by 10 percentage points (ppts). The Wales Act 2014 enables the Welsh Government to control the three Welsh Rates of Income Tax (WRIT) which are added to the reduced UK Government rates. These were all set at 10 ppts for the 2019 to 2020 tax year. The combination of reduced UK rates plus the Welsh rates determine the overall rate of income tax paid by Welsh taxpayers, so the overall rates paid by Welsh taxpayers remained the same as elsewhere in the UK in the 2019 to 2020 tax year. HMRC publishes statistics in the Welsh Income Tax Outturn.

Comparing figures with the SPI

The Income Tax liabilities shown in tables 3.16 and 3.17 differ from these outturn figures due to a range of factors including data (the outturn is based on a 100% data extract, however, the SPI is based on a sample) and measurement of Income Tax. In addition, there can be a difference between being a Scottish or Welsh taxpayer as set out in the Scotland and Welsh Acts and having a Scottish or Welsh residential postcode - for example if someone moves to Scotland or Wales towards the end of the year. Tables 3.16 and 3.17 allow users to compare Income Tax due on earned income for Scottish and Welsh taxpayers and taxpayers who had a Scottish or Welsh residential postcode at the end of the tax year.

The forecasts of Scottish and Welsh Income Tax that may be produced by the Office for Budget Responsibility, Scottish Fiscal Commission or Welsh Government and the outturn reported in the HMRC Accounts, may differ from what is shown in tables 3.16 and 3.17 for many reasons, including the following:

• Economic forecasting error: forecast assumptions such as earnings increases may prove incorrect, for example, if the economy grows more or less than expected.

• Identification of taxpayers: taxpayers may have been classified based on their residential postcode as a proxy for identifying Scottish or Welsh taxpayers, or alternatively by the Scottish or Welsh taxpayer indicator directly where this was available .

• Methodology and data: the SPI is based on a sample and therefore produces estimates rather than exact figures. These estimates have a margin of sampling error associated with them as discussed above. The outturn figures published in HMRC’s Annual Accounts are based on a 100% data.

• Measurement of Income Tax: for example, the outturn figures include an adjustment for uncollected tax but the SPI tables in this document purely reflect taxpayers’ tax liabilities.

Comparison with Table 3.11

The information provided in tables 3.16 and 3.17 differs from that presented in table 3.11. Table 3.11 shows Income Tax due from all sources of income, whereas tables 3.16 and 3.17 show the amount of tax due on non-savings/non-dividend (NSND) income only.

Furthermore, Table 3.16, which uses the Scottish and Welsh taxpayer indicators, differs from tables 3.11 and 3.17 (and the sub-regional breakdowns in the separate annual release covering tables 3.12 to 3.15a) which classify each individual based on their residential postcode.

There will be some individuals who are included in table 3.16 as a Scottish or Welsh taxpayer who are living outside of Scotland or Wales at the end of the year and are therefore included in a different area in table 3.11 or as having a non-Scottish or non-Welsh residential postcode in table 3.17. Similarly, there will also be some individuals who are not Scottish or Welsh taxpayers for a given tax year but will be living in Scotland or Wales on 5th April 2020 and included in the Scotland or Wales categories in table 3.11 and 3.17.

Table 3: Summary of the differences between taxpayer classification and tax definitions for tables 3.11 (and 3.12 to 3.15a), 3.16 and 3.17

Table	Taxpayer classification	Tax definition
3.11 (and 3.12 to 3.15a)	Residential postcode on 5th April for a given tax year	Income Tax from all sources of income
3.16	Scottish and Welsh taxpayer indicator (individuals taxed under the Scottish or Welsh tax systems for a given tax year)	Non-savings/non-dividend (NSND) tax
3.17	Residential postcode on 5th April for a given tax year	Non-savings/non-dividend (NSND) tax

15. UK Standard Industrial Classification of Economic Activities 2007 (SIC2007)

For Table 3.9, the industry categories are based on UK Standard Industrial Classification of Economic Activities 2007 (SIC2007). Most categories comprise one or several of the 21 Sections from SIC2007. The exception is that Section M (Professional, Scientific and Technical Activities) has been split into two parts so that Legal and Accounting activities, a significant component of self-employment activity, can be separately identified.

Table 4: SIC2007 Section letter and range of SIC2007 5 digit codes that form each industry category in table 3.9

Table 3.9 Category	Section	SIC2007 codes
Agriculture, Forestry and Fishing	A	01110 – 03220
Manufacturing	C	10110 - 33200
Construction	F	41100 - 43999
Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles	G	45110 – 47990
Transportation and Storage	H	49100 – 53202
Accommodation and Food Service Activities	I	55100 – 56302
Information & Communication	J	58110 – 63990
Financial, Insurance and Real Estate Activities	K, L	64110 - 68320
Legal & Accounting Activities	M	69100 – 69203
Other Professional, Scientific and Technical Activities	M	70100 – 75000
Administrative and Support Service Activities	N	77110 – 82990
Education	P	85100 – 85600
Human Health and Social Work Activities	Q	86100 - 88990
Arts, Entertainment and Recreation	R	90010 – 93290
Other Industries	B, D, E, O, S, T and U	05100 – 09900, 35110 – 39000, 84110 – 84300, 94110 – 99000
Unknown Industries		Blank or invalid values

More information about SIC2007 can be found on the ONS website at: Standard Industrial Classification index

16. Glossary of Terms

This section aims to explain acronyms, abbreviations and terms associated with personal incomes and Income Tax liabilities.

Allowances

The amount of income which an individual can receive before being liable for Income Tax. The Personal Allowance is an example of an allowance.

Average rate of tax

The ratio of Income Tax liability to total income, where income is measured before deductions, reliefs and allowances.

Basic rate limit

The highest income point for taxable income (after allowances) at which basic rate Income Tax is charged.

CESA (Computerised Environment for Self Assessment)

The computer system used to administer Self Assessment from which SA data for the SPI has been extracted since 1996 to 1997. See Self Assessment (SA).

COP (Computerisation of PAYE)

The computer system which used to administer PAYE until it was replaced by NPS and from which PAYE data for the SPI was extracted for tax years 1997 to 1998 to 2007 to 2008 inclusive.

Deductions and Reliefs

Amounts deducted from total income, along with personal allowances to arrive at the amount of taxable income subject to an Income Tax charge. This includes amounts for contributions to occupational and personal pensions, and a variety of other Deductions and Reliefs including charitable giving and loss relief etc.

Dividend Income

Income derived from shares.

Geographical Areas

Some tables present information for sub-UK areas described as Government Office Region, County, District and Parliamentary Constituency. Administrative and Political geographical areas are not held on taxpayers’ records. For the SPI, the areas are attached by matching the individual’s postcode to the Office for National Statistics Postcode Directory.

Industry

Industry categories are based on UK Standard Industrial Classification of Economic Activities 2007 (SIC2007). Income from self-employment (sole trade and partner) is assigned an industry using the business text descriptions supplied on Self Assessment returns.

National Insurance and PAYE System (NPS)

NPS is the computer system HMRC uses to administer PAYE. It replaced COP and is the source of PAYE data for SPI for tax year 2008 to 2009 onwards.

National Insurance Recording System 2 (NIRS2)

The computer system used to monitor payment of National Insurance (NI) contributions and to calculate and prove entitlement to contributory benefits. These include Job Seekers Allowance (JSA) and the National Insurance Pension. It provides contribution information to a number of government departments.

P14s

Form P14 is an End of Year summary for an employment that is submitted by the employer to HMRC, showing pay, tax and NI contributions for the year. The employer provides similar information to the employee on an end of year certificate, form P60.

Pay As You Earn (PAYE) PAYE is the system used by HMRC to collect and account for Income Tax on earnings from employment and pensions. Income Tax and National Insurance Contributions are deducted by the employer and paid over to HMRC on behalf of the individual for each pay period.

Personal Allowance

The amount of income you can receive for the tax year without having to pay tax on it.

Real Time Information (RTI)

The RTI data used in this release come from HMRC’s PAYE RTI system. It covers the whole population rather than a sample of people or companies.

Savings Income

A particular class of income that includes interest on bank and building society accounts.

Self Assessment (SA)

SA is a system where an individual declares their income and can calculate their own Income Tax due after the end of the tax year. Taxpayers included in SA can be higher earners, self-employed and taxpayers with complex tax affairs.

Starting rate limit/Starting rate for savings limit

The highest income point for taxable income (after allowances) at which starting rate Income Tax is charged. From tax year 2008 to 2009 the starting rate was abolished for non-savings income and applied only to non dividend savings income. From tax year 2015 to 2016 the starting rate of tax for savings income was reduced from 10% to 0%, and the amount of savings income that the new 0% rate applies to was increased from £2,880 to £5,000. For more information please see the following briefing: Starting tax rate for savings interest

Superannuation contributions

The regular amounts paid by an employee into an employer occupational pension fund; these are deducted from the employee’s salary. Superannuation contributions to an authorised fund or scheme are not liable to Income Tax and the employer would deduct the amount of superannuation contributions from the gross pay before assessing the Income Tax liability through PAYE.

Survey of Personal Incomes (SPI)

An annual 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.

Tax liabilities

The amount of Income Tax due on taxable income after applying tax rates to the tax base. The Income Tax liability for each sample case in SPI is calculated by reference to the amounts of income by type, deductions and reliefs and the tax regime parameters that apply for the year. The calculated liability for a tax year will differ from the amount of tax receipts collected in a financial year.

Tax receipts

The amount of Income Tax collected by HMRC. The SPI measures the amount of Income Tax liability for a tax year, but not the amount of receipts in the financial year.

Taxable income Income assessable to Income Tax after allowances.

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.

Total income

The sum of an individual’s components of income taken into account in calculating Income Tax. This includes earnings from employment, profits from self-employment, pension income, some social security benefits, savings income, income from shares (dividends), rental income, and income paid from trusts. It excludes:

• gains from the disposal of assets that are classified as capital gains

• interest, dividends or bonuses from tax exempt investments (for example, ISAs and National Savings & Investments Savings Certificates)

• interest and terminal bonuses from Save As You Earn Schemes

• Premium Bond, National Lottery and gambling prize winnings

Total income is calculated before relief for contributions to occupational and personal pensions, other deductions and reliefs or personal allowances.

In the tax system, income is streamed into three main categories: dividends; savings income (not dividends); and non-savings income as different rules apply.