For decades the incomes of the Top 1 per cent pulled away from the rest of society, before crashing back down in the 2008 financial crisis. But what has happened since then? Unfortunately, data on the incomes of the very rich often does a bad job of assessing how much they really receive, with capital gains ignored entirely. However, innovative new research – and a collaboration between the Resolution Foundation, the London School of Economics and CAGE at the University of Warwick – uses confidential tax return data to give a fuller picture of the incomes of the top 1 per cent, how it’s changed over time, and how it changes what we thought we knew about UK inequality in the 2010s. How can we get a better picture of the incomes of the very rich? What has driven the fortunes of the top 1 per cent? Will the current crisis have reduced their income share? And do we need to rethink our attitude towards income inequality in post-pandemic Britain? The Resolution Foundation is hosting an interactive webinar to debate and answer these questions. Following a presentation of the highlights of ground-breaking new research on how to more accurately assess the incomes of the top 1 per cent, leading experts will debate the lessons policy makers should draw. Viewers will be able to submit questions to the panel before and during the event.

1. Capital Gains and UK Inequality
New evidence using tax microdata
Dr Arun Advani, University of Warwick, CAGE
Dr Andy Summers, LSE
@arunadvaniecon / @cage_warwick
@summers_ad / @lseinequalities
International
Inequalities Institute

2. 2
HMRC Disclaimer
This work contains statistical data from HMRC which is Crown Copyright. The research datasets used
may not exactly reproduce HMRC aggregates. The use of HMRC statistical data in this work does not
imply the endorsement of HMRC in relation to the interpretation or analysis of the information.
Acknowledgements
The authors thank Helen Hughson for outstanding research assistance; Felix Koenig and Lorenzo
Pessina for foundational work on which this analysis builds; Tim Monteath and Yannis Papadakis for
additional assistance; the entire HMRC Datalab team – especially Yee Wan Yau, Alastair Currie and
James Dainty – for insights and support; and Tahnee Ooms for helpful comments.
Funding
This research was funded by the Economic and Social Research Council (ESRC) through the Centre
for Competitive Advantage in a Global Economy (CAGE) at Warwick (ES/L011719/1) and by LSE
International Inequalities Institute, LSE Law, and Warwick Economics.

3. 3
What are capital gains?
• Profit on selling an asset for more than you bought it
• For example:
• Rental property
• Fine art
• A business

4. 0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
54,000 41,000 28,000 15,000 2,000
Gains per person (£millions)
Ranking by gains, 1000 individuals per bin
Minimum gains
within bin
Average gains
within bin
Highest gainersLowest gainers
(above £100k)
4
Gains are very highly concentrated
Distribution of taxable gains (£millions)
All individuals with total net gains over
£100,000

5. 5
A significant minority of gains are persistent
%
0
10
20
30
40
50
60
70
<£20k £20-100k £100-200k £200-500k £500k-1m >£1m
Mean gains per year over previous four years (2013-2016)
% of individuals with gains
over £100,000 in 2017

6. 6
Total (taxable) gains are large and rising
0
10
20
30
40
50
60
70
0
10
20
30
40
50
60
70
1997 2000 2003 2006 2009 2012 2015 2018
Aggregate gains
(£billions)
Financial Crisis and tax
reforms to capital gains

7. 7
Including gains increases top income shares
% of
total
0
2
4
6
8
10
12
14
16
18
Top 1% Top 0.1% Top 0.01%
Income only

8. 0
2
4
6
8
10
12
14
16
18
Top 1% Top 0.1% Top 0.01%
Including gains, ranked by income only
Income only
8
Including gains increases top income shares
% of
total

9. 0
2
4
6
8
10
12
14
16
18
Top 1% Top 0.1% Top 0.01%
Including gains, ranked by income only
Income only
Including gains, re-ranked
9
Including gains increases top income shares
% of
total

10. 0
2
4
6
8
10
12
14
16
18
20
0
2
4
6
8
10
12
14
16
18
20
1997 2000 2003 2006 2009 2012 2015 2018
Top 1% share
Income only
Including gains
10
Inequality including gains has been rising

11. 0
1
2
3
4
5
6
7
8
9
10
0
1
2
3
4
5
6
7
8
9
10
1997 2000 2003 2006 2009 2012 2015 2018
Top 0.1% share
Income only
Including gains
11
Inequality including gains has been rising

12. 0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1997 2000 2003 2006 2009 2012 2015 2018
Top 0.01% share
Income only
Including gains
12
Inequality including gains has been rising

13. 13
Gains are taxed at lower rates than income
0
10
20
30
40
50
0
10
20
30
40
50
Income Tax
(top rate)
Dividend Rate
(top rate)
CGT
Entrepreneurs'
Relief
CGT Main rate CGT
Residential
property
%
Income Tax
National
Insurance
%
Taxes on income Tax on gains

14. 14
The line between income / gains is blurred
(1) Repackaged earnings from work
• Personal services companies (retained profits on liquidation)
• Executive pay packages (employee share schemes)
• Fund managers (‘carried interest’)
(2) Swapping income for gains
• Business managers (Entrepreneurs Relief)
• Investors (capital growth over income)

15. 15
This mostly benefits business managers
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
54,000 41,000 28,000 15,000 2,000
Carried interest of fund managers
Listed shares (PLCs)
Unlisted shares (private businesses)
Residential property
Other assets incl all Entrepreneurs' Relief gains
Gains per person (£millions)
Ranking by gains, 1000 individuals per bin
Lowest gainers
(above £100k)
Highest gainers

16. 16
Especially ‘super gainers’ (gains >£1mil)

17. 17
The tax system does little to reduce top-end inequality
For more on “How much tax
do the rich really pay?”
15th June, LSE public event
Link https://bit.ly/2XazE1U
Pre/post tax inequality
income only
Pre/post tax inequality
including gains