Number of payrolled workers in UK fell by 78,000 ahead of budget tax rise

UK Prime Minister Keir Starmer Paid £54,718 in Tax Last Year

Sir Keir Starmer paid £54,718 in income tax

According to a document released by the government, UK Prime Minister Sir Keir Starmer paid £54,718 in income tax during the 2023/24 financial year.

The summary shows that for the tax year ending on 5 April 2024, Starmer paid income tax on earnings of £152,225. Most of this income came from his role as a Member of Parliament, with additional earnings from book royalties and £5,174 in interest from savings accounts.

Chancellor Rachel Reeves and Deputy Prime Minister Angela Rayner also published their personal tax summaries for the same financial year:

● Rachel Reeves had a total annual income of £91,758 and paid £24,215 in income tax. Her self-employment income totalled £12,372, primarily from book royalties and audiobook fees.

● Angela Rayner reported a total income of £85,205 and paid £21,514 in income tax. All of her income and taxable benefits came from her work as an MP.

Although the figures may appear substantial, Starmer’s income tax bill for 2023/24 was lower than in the previous year. In 2022/23, he paid £52,688 in Capital Gains Tax after selling a piece of land partially inherited from his father. His total tax paid that year was only about one-fifth of the amount paid by then-Prime Minister Rishi Sunak.

This latest tax summary outlines Starmer’s taxable UK income, capital gains, and tax liabilities for the previous financial year. It was prepared by his chartered accountancy firm and submitted to HM Revenue & Customs (HMRC).

David Cameron became the first British Prime Minister to publish a tax summary in 2016. Theresa May also released her tax information during her Conservative leadership campaign but did not do so while serving as Prime Minister.

Rishi Sunak and Chancellor Jeremy Hunt have both disclosed their personal tax data while in office. However, Sunak’s two immediate predecessors, Boris Johnson and Liz Truss (whose tenure lasted less than two months), did not make their tax records public.

Inflation continues to fall, more interest rate cuts are expected this year

According to data released by the Office for National Statistics (ONS), the Consumer Price Index (CPI) inflation rate fell to 2.6% in March, marking the second consecutive month of decline and a drop that exceeded expectations. This represents the slowest pace of price increases since December last year, bringing inflation closer to the Bank of England’s 2% target.

The decline was largely driven by falling oil prices, reduced fuel costs, and a steady rate of food price increases. However, analysts caution that the drop may be temporary, as a series of tax hikes introduced in early April are expected to raise household bills.

Meanwhile, core inflation—which excludes volatile items such as fuel and food—fell to 3.4%. This is seen as encouraging news for the Bank of England, which is currently weighing interest rate cuts. The Bank’s Monetary Policy Committee is scheduled to meet next month and is widely expected to reduce the base rate to 4.25% to ease borrowing costs.

Based on current economic indicators, analysts generally anticipate four interest rate cuts this year, with the base rate projected to reach 3.5% by December 2025. Lowering the base rate reduces interbank lending costs, prompting commercial banks to offer lower loan rates. This makes borrowing cheaper for both businesses and individuals, thereby stimulating economic activity, encouraging business investment, and boosting consumer spending.

At the same time, the United States and EU countries have also been working to curb rising prices. The Eurozone’s inflation rate stood at 2.2% in the same period, down from 2.3% in February. Since the European Central Bank (ECB) cut its base rate for the first time in five years in June 2024, it has reduced rates five times to the current 2.5%.

In the US, the inflation rate has fallen to 2.4%. At its March meeting, the Federal Reserve held its benchmark interest rate steady in the 4.25% to 4.5% range but revised down its economic growth forecast.

Number of payrolled workers in UK fell by 78,000 ahead of budget tax rise

According to revised data released by the Office for National Statistics (ONS), the number of people on UK payrolls (via the Pay As You Earn, PAYE system) fell by 8,000 in February, followed by a significant drop of 78,000 in March—marking the fastest decline since the peak of the COVID-19 pandemic.

This sharp contraction reflects growing global uncertainty and suggests that many businesses sought to reduce costs through layoffs ahead of tax increases introduced in April.

Business leaders had previously warned that the tax hikes announced by Chancellor Rachel Reeves in last autumn’s Budget would force companies to cut jobs and hold back on larger wage increases. Multiple surveys conducted earlier this year indicated that UK businesses were reducing headcounts at the fastest rate since the 2008 financial crisis (excluding anomalies during the pandemic).

Earlier this month, the rise in employer National Insurance contributions began impacting nearly one million businesses. In addition, the increase in the minimum wage has added further cost pressure, particularly on sectors such as hospitality, leisure, and retail.

Suren Thiru, Economics Director at the Institute of Chartered Accountants in England and Wales (ICAEW), commented: "These figures suggest the labour market was already weakening ahead of the sharp tax and cost increases this month. Faced with a double hit of rising uncertainty and increasing expenses, employers have scaled back hiring plans. The UK job market is entering a turbulent phase, and despite persistent skills shortages, the combined impact of global uncertainty and mounting cost pressures—particularly from higher National Insurance—could lead to a moderate rise in unemployment."

In the three months to March, the number of job vacancies fell by 26,000 to 781,000—dropping below pre-pandemic levels for the first time since 2021. Meanwhile, the UK’s official unemployment rate remained unchanged at 4.4% in the three months to February.