The average UK household pays almost three quarters of a million pounds in taxes over the course of a lifetime, according to research by The Taxpayers’ Alliance (TPA).
Analysis of 2013/14 figures from the Office for National Statistics shows that households pay an average of £734,240 in direct and indirect taxes during their lifetime.
This is a 2.3% increase on the lifetime tax calculation found in a similar survey last year which showed the average household paying £717,650 based on 2012/13 tax rates and income.
Over the average lifetime, calculated at 40 working years followed by 15 of retirement, a household will pay:
- £253,040 in income tax (after tax credit deductions)
- £146,775 in VAT
- £92,795 in employee national insurance contributions
- £59,955 in council tax (after deductions for rebates).
The research reveals a major gap between the expected total tax payments of the top and bottom income brackets. The average household in the bottom 20% will pay £282,545 in taxes during their lifetime while the top 20% will be charged £1,488,275.
The 2013/14 figures show that low income households have seen their average lifetime tax bill rise 4.1% from 2012/13 while the lifetime tax bill for high earners has shrunk 2.2%.
Nigel Holland from Holland & Co Chartered Accountants said:
“These figures from the Tax Payers Alliance show how high the tax bill is for UK families. It is important that the money paid in tax is not wasted and that inefficiencies and waste in central and local Government is removed so that the tax which is paid is not squandered.
At my firm we regularly look into ways of reducing the tax incurred by our clients and we use many schemes which help reduce the tax bill. These schemes must be lawful and genuine but if a business is well run then there are several legitimate ways in which the firm can reduce it’s tax bill.