Partner Article

Middle income homes hardest hit by recession

Middle-income families are being hit hardest by the recession, as many say disposable incomes drop by £1,100 to £24,400 in the year to April, according to the Office for National Statistics (ONS).

This quadruple the average fall of £200 to £30,300 across all households. The poorest homes have suffered the brunt of tax and duty rises, whilst also seeing their disposable income spend on indirect taxes rise from 28% to 31%.

The richest tier saw the proportion of earnings spent on indirect taxes rise from 12% to 13%, meaning that their post-tax incomes were more than seven times those of the poorest fifth.

The average household pays £7,500 annually in direct tax including income tax and council tax, while the richest fifth pay £19,500 of their gross income into the tax system. The poorest fifth pay 10% or £1,300.

The amount of cash benefits, such as tax credits, housing benefit and income support, tends to be higher for poorer households than for richer households.

On average families in the second fifth of households received the largest cash benefits, which averaged £8,300, in comparison with £7,000 in the bottom group.

On average the richest group received an average of only £2,100 in cash benefits, of which the main source was the state pension.

This was posted in Bdaily's Members' News section by Ruth Mitchell .