Rise in income tax receipts may be small as data shows pay growth mainly among low paid

The rate of pay growth in the UK has risen to 3.3%, but this may not have a huge impact on income tax receipts, as analysis by the Resolution Foundation has revealed increases have been concentrated at the bottom end of the labour market.

Responding to the latest Office for National Statistics data on the labour market, the foundation noted that pay growth is greatest in sectors such as hospitality, real estate, information and communication technology (ICT), wholesale and health and social work. It said this indicates that much of the impact has come from increases in the National Living Wage. However, with the latest rise in the personal allowance to £12,500, this may do little for the Treasury's income.

Senior Economic Analyst at the Resolution Foundation Stephen Clarke said, "Britain’s tightening jobs market is delivering stronger pay rises, particularly for workers in ICT, hospitality and real estate. 2019 looks set to be a far better year for pay than this one. But after a pretty appalling decade, Britain remains some way off a return to the levels of real pay we enjoyed before the crash."