Your Tax Bill: £600,000 And Climbing!
A typical British household faces a tax bill of more than £600,000 over a lifetime. Here's how to keep the taxman's mitts off your money.
According to a report from the TaxPayers' Alliance (TPA), the average British household pays more than £600,000 in taxes during the course of a lifetime.Furthermore, the richest fifth of households pays nearly £1.2m in lifetime taxes, although there are many individuals in the UK whose personal tax bills exceed this level. What's particularly striking is how much the poorest households cough up to the Treasury: nearly £250,000, according to the TPA's analysis of the official figures for taxation.The TPA's report revealed that the poorest fifth of households (around five million households in total) pays nearly £26,000 in income tax over a lifetime, compared with £621,000 for the richest fifth. Low-income households pay far less income tax simply because they pay lower rates of taxes on their modest earnings, plus they are the biggest recipients of the government's tax credits.What's more, the poorest households will pay £30,000 in Council Tax over a lifetime, compared with £62,000 for the richest households. Value Added Tax increases the tax bill for low-income households by £67,000, compared with £165,000 for the richest.Taxes have been rising steadily in recent years, with Tax Freedom Day being pushed back to 3 June this year. This means that the average worker is lining the Treasury's pockets for the first 153 days of 2006. In other words, three-sevenths (42%) of a typical worker's salary is gobbled up by taxes. This is far too much, in my opinion, especially given that public-sector inefficiency and wastefulness cost £75 billion a year, which comes to a sixth of all taxes collected!When the present government came to power in 1997, Tax Freedom Day was on 25 May. Alas, thanks to tax rises, Gordon Brown now pinches an extra nine days of our lives each year. What's more, tax rises and bigger bills have caused the average disposable income to fall over the past twelve months, so we have less cash left over than we did a year ago. Ouch!Although tax cuts are likely to be debated heavily at this week's Conservative party conference, the official line is that the Tories refuse to promise explicit tax cuts. However, this would be a popular move, as research from ICM found that 46% of voters would be more inclined to vote Tory at the next election if the party made a pledge to lower taxes (though 35% disagreed).Anyway, if you'd like to reduce your personal tax bill (legally, of course!), then read the following tips:Eight Taxes To AvoidTen Ways To Avoid Inheritance TaxStop Working For The TaxmanStop Paying Too Much TaxMore: Dodge tax by investing inside an ISA and avoid paying interest on your debts with a 0% card!