Keir Starmer's Tax Payments Align with UK Rates, Debunking Lower Rate Claims

Keir Starmer's tax payments for the 2022/23 fiscal year have been scrutinized following the publication of his tax return in February 2024. The document reveals that the Labour Party leader's tax contributions align with the rates applicable to British citizens in his income bracket, contrary to claims circulating on social media platforms.

A post on X, formerly known as Twitter, garnered over 780,000 views since September 18, 2023, suggesting that Starmer paid a lower tax rate than other British residents. The post claimed, "Last year Kier (sic) Starmer earned £400k yet paid just 25% in tax. The Tax rate for British citizens on this amount of income is 44%."

Upon closer examination, Starmer's tax return shows he paid £99,431 in tax on a declared income of £404,000. While the 25% figure is broadly accurate, it's crucial to understand the breakdown of his income and the applicable tax rates.

Starmer's income comprised £130,121 in salary, including £79,098 for his role as an MP and £49,193 as Labour leader. The UK tax system in 2022/23 applied a 20% rate on income up to £37,700 and 40% on earnings between £37,700 and £150,000. It's worth noting that the UK tax year runs from April 6 to April 5 the following year, a practice that has been in place for centuries.

The UK's tax-free personal allowance of £12,570, introduced in April 2021, is gradually reduced for high earners and completely lost for those earning over £125,140. In Starmer's case, his high income meant he did not benefit from this allowance. His income tax amounted to approximately £44,000, calculated as £7,540 at the 20% rate and £36,574 at the 40% rate.

A significant portion of Starmer's income came from capital gains, totaling £275,739 from the sale of a field. Capital Gains Tax, introduced in the UK in 1965, is applied at a 20% rate for higher earners after a personal allowance of £12,300. This resulted in an additional tax payment of £52,688.

The complexity of the UK tax system is notable, with the tax code spanning over 17,000 pages, making it one of the longest in the world. This intricacy often leads to misunderstandings and misconceptions about tax rates and calculations.

Starmer's tax return also included a £2,435 "pension annual allowance excess charge," bringing his total tax bill to £99,431. This comprehensive breakdown demonstrates that his tax payments were consistent with the rates applicable to all British citizens in similar financial situations.

It's important to note that the UK has a long history of income taxation, with the first income tax introduced in 1799 to fund the Napoleonic Wars. The current system, while complex, aims to apply consistent rates across all taxpayers based on their income levels and types.

In response to the social media claims, a spokesperson for the prime minister's office acknowledged that the post on X had been subject to a community note, highlighting its potential to mislead. However, they declined to comment further on the matter.

Her Majesty's Revenue and Customs (HMRC), the UK's tax authority, also refrained from commenting on the specific case. This is in line with their general policy of not discussing individual tax affairs.

In conclusion, the analysis of Keir Starmer's tax return for 2022/23 reveals that his tax payments were fully consistent with the rates applicable to British citizens at his income level. The social media claims suggesting preferential treatment were misleading and failed to account for the complexities of the UK tax system, including the application of different rates to various types of income and capital gains.