Official Statistics

Quality report and methodology

Published 25 August 2022

1. Contact

• Organisation unit – Knowledge, Analysis and Intelligence (KAI)

• Name – T Curd

• Function Statistician, Benefits and Credits

• Email – benefitsandcredits.analysis@hmrc.gov.uk

2. Statistical presentation

2.1 Data description

This statistical release provides various estimates of Income Tax, National Insurance contributions (NICs), tax credits and Child Benefit paid and received by European Economic Area (EEA) nationals and non-EEA nationals.

2.2 Classification system

Breakdown of tax credits payments received by different family structures is determined using HM Revenue and Customs’ (HMRC’s) administrative tax credits data.

Nationality breakdowns are determined using HMRC’s Migrant Worker Scan. Nationality is reported by individuals when they register for a National Insurance number through the adult National Insurance number registration process. If an individual has subsequently naturalised or changed nationality, this will not be reflected in these statistics.

2.3 Statistical concepts and definitions

United Kingdom (UK)

The United Kingdom consists of England, Scotland, Wales and Northern Ireland.

European Economic Area (EEA)

The EEA consists of 27 countries of the EU in addition to Iceland, Liechtenstein and Norway. 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.

Recently arrived non-UK nationals

‘Recently arrived’ covers the latest four years of data available. For the purpose of these estimates, this means that the effective date of arrival is from 6 April 2016 to 5 April 2020 inclusive.

The ‘effective date of arrival’ is the earlier of either the National Insurance number registration date or the self-reported arrival date. As arrival date is self-reported, the effective arrival date should be considered an estimate.

Pay As You Earn (PAYE)

PAYE is HMRC’s system to collect Income Tax and National Insurance from employment.

Survey of Personal Incomes

An annual sample survey of individuals who could be liable for income tax derived from HMRC administrative data on individuals within PAYE, Self-Assessment 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.

Child Benefit

Child Benefit is paid to those responsible for children (aged under 16) or qualifying young people. Awards are subject to residence criteria being satisfied.

Further information about Child Benefit.

Tax credits

Tax credits are a system of financial support for families based on their specific circumstances. Entitlement is based on a number of factors including age, income and number of children.

Further information on tax credits.

Income tax

Income Tax is a tax paid on income.

Further information on Income Tax.

National Insurance contributions

National Insurance contributions are paid to qualify individuals for certain benefits and the State Pension.

National Insurance payments are mandatory for individuals aged 16 or over and either:

• an employee earning above £190 a week

• self-employed and making a profit of £6,725 or more a year

Further information on National Insurance contributions.

National Insurance number

National Insurance numbers ensure that National Insurance contributions and tax are recorded against an individual’s name only.

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

Individuals not allocated a National Insurance number through the standard registration process (for example, those who come from abroad after the age of 16) are required to apply for a National Insurance number through the Department for Work and Pensions’ (DWP’s) 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 Department for Work and Pensions (DWP) operate the National Insurance number allocation service. Information held in the National Insurance system is not intended to be a precise and continuing reflection of an individual’s nationality/citizenship.

Further information on National Insurance number allocation and nationality is available in statistics released by DWP.

Temporary Reference Number

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 Temporary Reference number.

Further information about cases where individuals can work in the UK without a National Insurance number .

This analysis excludes individuals paying tax using a Temporary Reference number in place of a National Insurance number.

In-work families

In-work families are defined as being in-work if they are entitled to Working Tax Credit.

Out-of-work families

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.

2.4 Statistical unit

The statistical unit in this analysis is individuals who are liable to Income Tax and NICs and/or individuals in receipt of tax credit and/or Child Benefit.

2.5 Statistical population

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

This analysis excludes individuals paying tax using a Temporary Reference number in place of a National Insurance number.

2.6 Reference area

The geographical region covered by the data is the UK.

2.7 Time coverage

These statistics cover the time period from 6 April 2019 to 5 April 2020

3. Statistical processing

3.1 Source data

HMRC’s administrative tax credits data

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 credits entitlement and the National Insurance numbers associated with an application.

HMRC’s administrative Child Benefit data

Families in receipt of Child Benefit are identified using HMRC’s administrative Child Benefit data for 2020 This data is used to produce the National Statistics publication Child Benefit Statistics August 2021 The statistics are as close to real time as possible and present a snapshot in time as at 31 August 2020, including backdated awards relating to new births.

HMRC’s administrative Child Benefit data only holds the National Insurance number of the main claimant in the Child Benefit recipient family. Therefore, only one individual in a 2 parent family will be taken into account in the analysis.

HMRC’s Survey of Personal Incomes

HMRC’s Survey of Personal Incomes is based 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.

Migrant Worker Scan

HMRC’s Migrant Worker Scan is a list of individuals who successfully apply for a UK National Insurance number through the adult (post-16) registration process. The vast majority of these individuals are foreign nationals.

Conversely, the vast majority of National Insurance numbers not in the Migrant Worker Scan are allocated to UK nationals. For this reason, the Migrant Worker Scan is frequently used as an index to identify taxpayers by nationality.

3.2 Frequency of data collection

HMRC tax credits administrative data

The data used for this publication is the annual tax credits data referring to the 2019 to 2020 tax year and is 100% data. This was produced and downloaded in April 2021

HMRC Child Benefit administrative data

A quarterly scan of HMRC Child Benefit administrative data is produced each February, May, August and November. An annual extraction is produced each August and is used in this publication. There are now monthly scans of the Child Benefit administrative data as the data has transitioned from DWP to HMRC.

Survey of Personal Incomes (SPI)

HMRC’s Survey of Personal Incomes is carried out annually and covers the income assessable for tax in each tax year. The tables in this publication are based on the survey for the 2019 to 2020 tax year.

The Migrant Worker Scan

HMRC’s Migrant Worker Scan is recreated in full once every quarter from National Insurance and Pay as You Earn Service (NPS) source tables. The June 2021 Migrant Worker Scan was used for this analysis.

3.3 Data collection

HMRC’s administrative tax credits data

The details of all tax credits claims and claimants are held on the National Tax Credits (NTC) system. The data is initially based on the information provided by the claimant in their original application.

Claimants are required to inform HMRC if there are any changes to their circumstances. Claimants are also sent an annual renewal pack which asks them to confirm that the information held by HMRC is still accurate.

HMRC receives an extract of this data. The estimates for out-of-work families administered by DWP are derived from scans of the benefits systems. These identify all families with children, receiving benefits. Subsequent matching is done to remove families who already claim tax credits.

HMRC’s administrative Child Benefit data

An extract from the Child Benefit Computer System is taken on 31 August each year and is supplemented with additional cases as identified from a further extract on 30 November. This identifies new claims that started between 31 August and 30 November and are in relation to a child born prior to 31 August.

Claimants are required to inform HMRC if there are any changes to their circumstances in the intervening period.

HMRC receive this data from a scan of the Child Benefit system. The data extract is 100% of administrative data which HMRC receives each quarter, however only the August and November extracts (as discussed above) are used for this publication.

HMRC’s Survey of Personal Incomes

HMRC’s Survey of Personal Incomes is carried out annually and covers the income assessable for tax in each tax year.

The figures in this publication are based on the surveys conducted for tax years up to and including 2019 to 2020.

Samples were selected from three 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 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.

Some individuals with a PAYE record are also in the Self-Assessment system. These individuals are excluded from the PAYE population prior to sampling, as their Self-Assessment 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:

(a) 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 approximately 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 the 2019 to 2020 tax year.

(b) 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 approximately 1 in 249 for employees and occupational pensioners with smaller income or tax for the 2019 to 2020 tax year.

In all, approximately 413,000 individuals were selected from Self-Assessment for inclusion in the SPI for the 2019 to 2020 tax year.

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 approximately 822,000 valid cases in the final Survey of Personal Incomes file for the 2019 to 2020 tax year .

Separate samples are drawn from each of these systems and then joined together to create the Survey of Personal Incomes.

Further information regarding statistics about personal incomes.

Migrant Worker Scan

HMRC’s Migrant Worker Scan is an extract or subset of data, compiled from the National Insurance and Pay as You Earn Service (NPS) database system. The NPS system is owned by HMRC, with input from DWP.

DWP register post-16 National Insurance numbers through their adult registration process, which usually includes an interview to verify identity and right to residency in the UK. In some circumstances, DWP will allocate National Insurance numbers following a successful application through the Home Office (HO) for a Biometric Residence Permit (BRP) or another ‘fast path’ application process.

In all of the above scenarios, DWP will allocate the National Insurance number and enter the information onto the NPS system.

The Migrant Worker Scan is recreated in full once every quarter from NPS source tables. Under current arrangements a version is created on behalf of HMRC for DWP and in a separate, similar process a version is created for HMRC KAI. The version held by DWP is further shared under an existing arrangement with the Office for National Statistics (ONS). Details of this arrangement are outlined in the ONS 2017 Migrant Worker Scan report.

3.4 Data validation

Checks carried out on the data include the following:

• checking and validating source data, including checking that data covers the expected period

• validating statistics after compilation by comparing trends over time and the relationships between tables

• identifying inconsistencies between the output data and other related datasets by comparing to other published statistics

3.5 Data compilation

Procedures for combining data from different sources

Data from different sources is combined using SAS statistical software. Data is combined using the National Insurance number as a unique identifier.

4. Quality Management

4.1 Quality assurance

All official statistics produced by KAI must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts adhere to best practice as set out in the ‘Quality’ pillar.

Analytical Quality Assurance describes the arrangements and procedures put in place to ensure analytical outputs are error free and fit-for-purpose. It is an essential part of KAI’s way of working as the complexity of our work and the speed at which we are asked to provide advice means that there is a high risk of error which can have serious consequences on KAI’s and HMRC’s reputation, decisions, and in turn on peoples’ lives.

As every piece of analysis is unique, there is no single quality assurance checklist that contains all of the assurance tasks required for each project. Nonetheless, analysts in KAI use a checklist that summarises the key assurance tasks, which is used as a starting point for teams when they are considering what assurance actions to undertake.

Teams amend and adapt this checklist as they see fit, taking in to account the level of risk associated with their analysis, and the different assurance tasks that are relevant to the work.

At the start of a project, during the planning stage, analysts and managers make a risk-based decision on what level of assurance is required.

Analysts and managers construct a plan for all of the assurance tasks that will need to be completed, along with documentation describing how these tasks are to be carried out.

Analysts carry out the assurance tasks, update the checklist, and pass onto the Senior Responsible Officer for review and eventual sign off.

4.2 Quality assessment

The assurance for this project adhered to the framework described in 4.1 Quality assurance and the specific procedures undertaken were as follows:

Stage 1 – Specifying the question

Documentation was updated, setting out outputs needed and by when; how the outputs would be used; and all the parameters required for the analysis.

Stage 2 – Developing the methodology

Methodology was agreed and developed, ensuring it was fit for purpose and would deliver the required outputs.

Stage 3 – Building and populating a model/piece of code

Stage 3 consists of the following steps:

• analysis was produced using the most appropriate software and in line with good practice guidance

• data inputs were checked to ensure they were fit-for-purpose by reviewing available documentation and, where possible, through direct contact with data suppliers

• the analysis was audited by someone other than the lead analyst – checking code and methodology

Stage 4 – Running and testing the model/code

Stage 4 consists of the following steps:

• results were compared with those produced in previous years and differences understood and determined to be genuine

• results were compared with comparable independent estimates, and differences understood

• results were determined to be explainable and in line with expectations

Stage 5 – Drafting the final output

The final stage includes the following steps:

• checks were completed to ensure internal consistency (e.g. totals equal the sum of the components)

• the final outputs were independently proof read and checked

5. Relevance

5.1 User needs

This analysis is likely to be of interest to users under the following broad headings:

• policy makers in government

• academia and research bodies

• media

• general public

5.2 User satisfaction

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

If you would like to comment on these statistics or have any enquiries, please contact benefitsandcredits.analysis@hmrc.gov.uk

5.3 Completeness

HMRC’s tax credits and Child Benefit administrative data includes all individuals who have applied for tax credits and Child Benefit.

The Migrant Worker Scan includes all individuals who have registered for a National Insurance number through the adult National Insurance number registration process.

HMRC’s Survey of Personal Incomes is derived from HMRC administrative systems, which hold data on all persons within PAYE, Self-Assessment and income tax claims.

The statistics contained in this report can therefore be considered to be complete.

6. Accuracy and reliability

6.1 Overall accuracy

The Income Tax analysis in this publication is based on data from HMRC’s Survey of Personal Incomes. The Survey of Personal Incomes is a sample survey and accuracy is addressed by eliminating sampling errors as much as possible through adherence to the quality assurance framework.

The NICs, tax credits and Child Benefit analysis in this publication is based on administrative data. Accuracy is addressed by eliminating non-sampling errors as much as possible through adherence to the quality assurance framework.

6.2 Sampling error

Tax credits, Child Benefit and Migrant Worker Scan data come from administrative systems, therefore sampling error is not relevant.

HMRC’s Survey of Personal Incomes

Sample response bias

The sample is drawn from records held on HMRC transactional systems and the available information reflects what is known about the cases approximately one year after the tax year to which the survey relates. Allowance is made for Self-Assessment cases yet to file a return and the overlap between the Self-Assessment and PAYE systems when estimating the likely final mature population for the tax year.

The SPI data reflects the information held on HMRC systems at the time the sample was drawn, therefore values associated with some cases, particularly in Self-Assessment could continue to evolve after the survey is completed.

Sampling error and bias

A stratified random sample is drawn across the three transactional systems. Cases are categorised by income band and other characteristics. Categories involving higher incomes tend to be sampled more intensively to improve the precision in estimates of total income. Confidence Intervals are published for sub UK estimates.

The methods for estimating the structure of the final mature population and dealing with item level non-response by imputation are designed to address the most significant sources of potential bias.

6.3 Non-sampling error

Coverage error

For tax credits, Child Benefit and the Migrant Worker Scan, all applications and payments data is captured in administrative data. Coverage error is therefore not relevant.

Coverage error is relevant in the Survey of Personal Incomes, as not all of the individuals in the 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 statistics in this publication only cover individuals liable to UK Income Tax (taxpayers) and their incomes.

Further information on the coverage of the Survey of Personal Incomes.

Measurement error

The main source of measurement error from administrative data sources could be categorised as respondent errors, for example incorrect information provided on application or the altering of data through human or software errors. To mitigate this, checks are carried out and any incorrect large values which are detected are investigated (and potentially altered) in the analysis database before the statistics are produced.

Non-response error

HMRC administrative data should capture all individuals liable to and entitled to Income Tax, NICs, tax credits and Child Benefit. Therefore non-response error is not relevant for these statistics.

HMRC’s Survey of Personal Incomes non-response error

Case and item level non-response

Case level non-response arises primarily because of late filing of tax returns. This is dealt with by estimating the likely size of the final mature population. Item level non-response refers to when a sample record has incomplete information for some characteristic. Age, gender and postcode are key variables for published statistics and if these items are missing from sample records, other sources are examined.

For most cases in the PAYE system, it is not necessary to know about taxed interest, dividends, Gift Aid etc. as an additional charge or relief is only due for higher rate cases. To create a complete estimate of total income for such cases, an imputation process allocates amounts randomly to cases so that population estimates follow pre-determined distributions.

Non-sample response bias

The estimated accuracy of the Survey of Personal Incomes survey responses is based on information from HMRC systems that are used to administer the income tax system, which ensures that the most accurate picture of declared personal incomes is used for the production of these statistics.

Once the initial Survey of Personal Incomes dataset is completed, values of bank and building society interest and dividends are imputed to some sample cases due to the coverage of investment income for the sample drawn from NPS being incomplete. It is incomplete because HMRC does not need information on interest from which tax has been deducted at source nor dividends and associated tax credit to operate the PAYE system for most individuals.

Superannuation contributions are imputed to all earnings records in order to derive a figure for total income. This is necessary because these pension amounts are already deducted from the reported taxable pay.

Processing error

It is possible that errors exist in the programming code used to analyse the data and produce the statistics. This risk is reduced by a thorough Quality Assurance process, which involves reviewing and testing the programs that are used.

6.4 Data revision

Data revision – policy

The United Kingdom Statistics Authority (UKSA) Code of Practice for Official Statistics requires all producers of Official Statistics to publish transparent guidance on the policy for revisions.

Data revision – practice

This analysis is published annually. Revisions are not routine but may occur for a number of reasons, for example as a result of an error found in processing. Where revisions are made the reason for them will be explained in the commentary.

6.5 Seasonal adjustment

Seasonal adjustment is not applied to this analysis.

7. Timeliness and punctuality

7.1 Timeliness

The reference period for these statistics is the income tax year ending on 5 April. Statistics for the income tax year will normally be published 20 months (national) and 21 months (sub UK) after the end of the tax year. The information is drawn from the transactional systems approximately a year after the reference period and it takes about 8-9 months to turn the raw dataset into information and commentary ready for publication.

HMRC Personal Incomes Statistics are published in March. The publication discussed in this report is not published at the same time, as the Survey of Personal Incomes data only becomes available on the date of publication, after which the analysis, quality assurance and formatting required for this publication must take place.

This publication is currently released 5 months after the Personal Incomes Statistics in order to coincide with the DWP Nationality at point of National Insurance number registration of DWP working age benefit recipients National Statistics publication.

7.2 Punctuality

In accordance with the Code of Practice for official statistics, the exact date of publication will be given not less than one calendar month before publication on both the schedule of updates for HMRC’s statistics and the research and statistics calendar of GOV.UK.

Any delays to the publication date will be announced on the HMRC National Statistics website.

The full publication calendar can be found on both the schedule of updates for HMRC’s statistics and the research and statistics calendar of GOV.UK.

8. Coherence and comparability

8.1 Geographical comparability

This analysis is presented for the UK.

8.2 Comparability over time

This publication has been produced annually since August 2016 and all previous publications are available on GOV.UK. The release highlights any changes made to methodologies, such as the calculation of figures that are presented in the data or data issues (if any). Data quality assurance checks have been made, using year on year comparisons and trends to identify any unexpected changes.

The figures in this publication can be compared to the Personal Incomes National Statistics for the corresponding year in order to compare national personal income figures with those of non-UK nationals.

The publication may also be compared to the Department for Work and Pensions’ Nationality at point of National Insurance number registration of DWP working age benefit recipients National Statistics . This publication is an annual statistical summary providing a count of claimants receiving one or more (DWP) Working Age (WA) benefits, broken down by nationality. However, these statistics do not include HMRC administered benefits such as tax credits and Child Benefit.

8.3 Coherence – cross domain

‘Average annual tax credits entitlement’ in this publication refers to the average entitlement across all finalised awards. Other statistical publications present averages for awards to families with children only. The two sets of averages are therefore not directly comparable.

Coherence – sub-annual and annual statistics

All statistics are presented as annual outputs. No coherence issues exist.

8.4 Coherence – internal

Rounding of numbers may cause some minor internal coherence issues as the figures within a table may not sum to the total displayed. Effort has been made to ensure totals between tables remain constant where appropriate.

9. Accessibility and clarity

9.1 News release

There have not been any press releases linked to this data over the past year.

9.2 Publication

The publication includes tables, published alongside associated commentary.

All tables are published in an OpenDocument format, and the associated commentary is in an HTML format.

Both documents comply with the accessibility regulations set out in the Public Sector Bodies (Websites and Mobile Applications) (No. 2) Accessibility Regulations 2018.

Further information about HMRC’s accessible documents policy.

9.3 Online databases

This analysis is not used in any online databases.

9.4 Micro-data access

Access to this data is not possible in micro-data form, due to HMRC’s responsibilities around maintaining the confidentiality of taxpayer information.

9.5 Other

There are no other dissemination formats available for this analysis.

9.6 Documentation on methodology

Background and guidance to interpreting this publication is made available to users as annexes in statistical commentaries.

9.7 Quality documentation

All Official Statistics produced by KAI must meet the standards in the Code of Practice for Statistics produced by the UK Statistics Authority and all analysts must adhere to best practice as set out in the ‘Quality’ pillar.

Information about quality procedures for this analysis can be found in the Quality Management section of this document.

10. Cost and burden

As all necessary data for this publication is obtained from administrative data sources, there is no additional burden on the public to provide information.

It is estimated to take around 30 days FTE to produce the annual analysis and publication.

11. Confidentiality

11.1 Confidentiality – policy

HMRC has a legal duty to maintain the confidentiality of taxpayer information.

Section 18(1) of the Commissioners for Revenue and Customs Act 2005 (CRCA) sets out our duty of confidentiality.

This analysis complies with this requirement.

11.2 Confidentiality – data treatment

The statistics in these tables are presented at an aggregate level to minimise the potential for the identification of individuals.

Where potential risks exist, statistical disclosure control (SDC) is applied to cells within tables. SDC is the application of methods to ensure confidential data is not disclosed to parties who don’t have authority to access it.

SDC modifies data so that the risk of data subjects being identified is within acceptable limits while making the data as useful as possible.

Disclosure in this analysis is avoided by applying rules that prevent categories of data containing the following:

• small numbers of contributors, and

• small numbers of contributors that are very dominant

If a cell within a table is determined to be disclosive, its contents are suppressed either by removing the data or by combining categories.

Further information on anonymisation and data confidentiality best practice.

12. 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.

12.1 Identifying the nationality of individuals

The Migrant Worker Scan is a dataset used to identify the nationality and other characteristics of individuals seen to be employees in the HMRC PAYE Real Time Information system.

See the statistical processing section for more information about the data in this publication and data collection methods.

12.2 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. The Survey of Personal Incomes is based on the information of individuals who could be liable to UK Income Tax.

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 NICs 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 NICs.

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

12.3 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.

Further details on the tax credits data used in this publication and data collection methods can be found in the statistical processing section.

The number of unique applications in the tax credits 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 tax credits entitlement at an individual level.

The tax credits entitlement of sole applications has been allocated wholly to the relevant National Insurance number. The tax credits entitlement of joint applications has 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 an EEA national and a non-EEA national. These families would therefore be counted in both the ‘Families with at least one 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 credits 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.

12.4 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.

Further information about HMRC’s Child Benefit data and data collection methods can be found in the statistical processing section.