What you really pay on the 20p rate of tax
We need to talk about tax.
The basic rate of tax is the 20p rate, right? Wrong. By the time you add in Employer's and Employee's National Insurance and Student Loan repayments, the average employee on a salary between £23,000 and £42,000 is paying almost 50p in tax. 20p? Hardly.
- New TaxPayers' Alliance and 'See what you mean' video shows the so-called "basic rate" of Income Tax, of 20 per cent, to be a fraud
- With Employer's and Employee's National Insurance added in, as well as student loan repayments, many young professionals are paying a basic rate as high as 48p on an income as low as £23,000
- New analysis shows a university graduate on an average income receiving a £100 pay rise will see just £51.85 land in their wallet. Even for those without student loan repayments, a £100 pay rise would come with a tax rate of well over 33 per cent
- Politicians are promising universal pensioner benefits, marriage allowances and subsidised childcare, but working young people are having to pick up the slack
Commenting on the video, Jonathan Isaby, Chief Executive, said:
"It is a scandal that the government is snatching half of a young graduate's hard- salary. At a time when politicians are busy promising the world to special interest groups, it's clear the burden is falling ever more on ordinary young working people. If the Prime Minister wants Britain to get a pay rise, perhaps he should stop making it so expensive for firms to do just that.
"Our tax system is loaded with double-speak and complications, and the 20p lie is only the most obvious example. Politicians need to reform the system so that we can have an honest debate about the tax bills hitting working people all too hard."
Richard Webb, Director of graphics consultancy 'See what you mean,' said:
"At 'See what you mean' we've seen first-hand how complex the UK tax system has become. I was amazed to find that nearly half of any rise I give to my team is taken away in deductions, and we're certainly not high-flying bankers on huge salaries.
"We can all argue about the acceptable level of tax required to provide all the good services we expect. But when deductions on ordinary graduates will leave them with barely half of their earnings in their pockets, what's it going to do to our economy? I hope this video will help start a real debate about how much should be taken out of graduate and middle income wages."
2:56 PM 29, Sep 2016 Tom Banks
4:10 PM 28, Sep 2016 The TaxPayers' Alliance
2:08 PM 22, Sep 2016 Sunny Chen
5:12 PM 15, Sep 2016 Dia Chakravarty
3:49 PM 15, Sep 2016 Sunny Chen
11:39 AM 15, Sep 2016 Tom Banks