Effects of Taxes and Benefits on Household Income, 2001-2002

<p>Abstract copyright UK Data Service and data collection copyright owner.</p>This analysis, produced by the Office for National Statistics (ONS), examines how taxes and benefits redistribute income between various groups of households in the United Kingdom. It shows where different types of households and individuals are in the income distribution and looks at the changing levels of income inequality over time. The <I>Living Costs and Food Survey</I> (LCF) is the source of the microdata on households from 2008-09 onwards. Previously, the <I>Expenditure and Food Survey</I> (EFS) was the data source. Derived variables are created using information from LCF/EFS and control totals from a variety of different government sources including the United Kingdom National Accounts (ONS Blue Book), HM Revenue and Customs, Department for Transport, Department of Health, Department for Education and Employment, and Department for Communities and Local Government.<br> <br><B>Main Topics</B>:<br>The analysis considers the distribution of household income using five income measures in order to assess the effect of government intervention. The five income measures are:<ul><li>original income: includes income from employment, private pensions, investment income and income from other non-government sources</li><li>gross income: original income plus cash benefits</li><li>disposable income: gross income minus direct taxes (income tax, employees' National Insurance contributions and local taxes)</li><li>post-tax income: disposable income minus indirect taxes</li><li>final income: post-tax income plus benefits in kind (from education, the National Health Service (NHS), travel and housing subsidies)</li></ul><br>Standard Measures:<br> Households are ranked by equivalised disposable income using the McClements equivalence scale (see methodology notes in the documentation for further details)