I don't know about you ......
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| UK Tax Bands April 2025 |
In the UK, every Pound and Penny earned over the basic tax allowance gets taxed (plus National Insurance Contributions if your working), and then your spending is taxed via VAT, and then savings are taxed .... so each pound is hit 3 (or 4) times. The Basic Tax Allowance has been frozen for some time and will remain so until April 2028, and so more and more people are dragged into paying taxes, even on quite modest sums. The State Retirement Pension will probably be taxed April 2026, making it worth less than the welfare version (the Pension Credit).
Needless to say, the amount of money the UK government collects through taxes is at a historical high. So the question then becomes 'Would you pay less tax if you lived abroad?' .... well would you?
It depends on who you are comparing our taxation system with ..... For instance, we tax people in the middle band of earnings (£12,571 to £50,270 - $16,051 to $64,182) comparatively lightly compared with our European neighbours ... so for example someone earning £28,000 ($35,756) pays nearly £6,000 ($7,662) in Income Tax and NICs ... leaving them with £22,000 ($28,089) wages. When you take into account the Employers having to pay a NIC contribution for each employee (in the example above around £3,000 ($3,827)) then the overall rate of taxation for this employee is about 28% and ends up in the hands of the government.
Whereas using the same example salary of £28,000 ($35,756) the Europeans governments take between 38% and 49% in taxation in various employment deductions for each employee. Meaning that despite my complaints, we are not taxed as heavily as other countries .... the situation evens out when you look at the top tax earners, as our government takes 51% on average in taxation for the employee. We then sit more in the middle, with Spain only taking 44% and Belgium 67%.
The UK's Value Added Tax (VAT) at 20% on the majority of goods a services (but not food and certain other products such as children's clothes), is set at about the same rate as other European countries. So despite my angst, it appears that the UK tax system is comparatively mild by European standards. However in 2016 our taxation revenue as a percentage on national income stood at around 33.2% which was lower the Europeans that year but higher than others. For example the USA taxation revenue as a percentage on national income in 2016 was 26%, Canada's was 31.7% and Ireland's was 23%.
Note: All figures were accurate at time of writing, but may have altered as events unfold following President Trumps economic interventions into the world trading system. Tax rates will undoubtedly alter if recession ensues.
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