A new study reveals that it would take an average household 19 years to pay off its tax bill.
New research from The TaxPayers’ Alliance shows how much tax we’re paying over our lifetime.
An average household will pay £734,240 (2013-14 prices) in direct and indirect taxes, an increase of 2.3% on last year’s £717,650.
That sum would take over 19 years to pay off if that was the only expense we had to pay out for.
How it affects different incomes
Households in the bottom 20% of earners will pay £282,545 in taxes, both directly and indirectly. That’s a 4.1% increase on the lifetime calculation for this group last year (£271,445). The average household income for this group was £12,916, meaning that it would take almost 22 years to pay the lifetime tax bill.
A household in the top 20% of earners will pay £1,488,275 in direct and indirect taxes. The total household income for this group was £83,750, taking almost 18 years to pay off their lifetime tax bill.
Those in the top 20% are actually paying 2.2% less than last year (£1,522,020).
Here’s how much tax different bands of earners pay over their lifetime, based on 40 working years and 15 retirement years.
|
2013-14 |
Bottom |
2nd |
3rd |
4th |
Top |
All households |
|
Gross income 2013-14 |
£12,916 |
£22,144 |
£31,617 |
£45,575 |
£83,750 |
£39,200 |
|
Total lifetime tax |
£282,545 |
£413,535 |
£610,575 |
£876,175 |
£1,488,275 |
£734,240 |
|
Years of income to pay lifetime tax bill |
21.9 |
18.7 |
19.3 |
19.2 |
17.8 |
18.7 |
Source: The TaxPayers’ Alliance
[SPOTLIGHT]Breaking it down, the average household will pay £253,040 of Income Tax, £146,775 of VAT, £92,795 in Employee’s National Insurance Contributions and £59,955 of Council Tax (net council tax rebates).
There are a number of ways to cut the amount of money you spend on tax such as driving a lower-emission vehicle, using your ISA and pension allowances, and using tax breaks such as childcare vouchers.
There's even a chance that you may be paying more tax than you need to. See if you could be entitled to a refund at How to get a tax refund.
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