In the current cost of living crisis, one of the key pressures on household budgets is tax. As our latest piece of research shows, the amount of tax that people are paying over their lifetimes has consistently risen over the decades.
1. You’re probably a (tax) millionaire!
Lifetime tax for an average household in 2019-20:
The lifetime tax for an average household in 2019-20 reached £1,101,255. This consists of direct taxes, such as income tax, council tax and national insurance, and indirect taxes, like alcohol duties, insurance premium tax and VAT.
2. The lifetime tax bill has shot up in a generation
Since the turn of the millennium, it has more than doubled in cash terms, rising from £504,295 in 1999-00 to its current amount. The most significant increases in the lifetime tax burden came in recent years, with it rising by almost £350,000 for the average household since 2015-16 - significantly more than the £254,400 increase it saw between 1999-00 and 2015-16.
3. Income tax and national insurance account for a majority of your bill
The biggest contributors to a household's lifetime tax are, understandably, the largest revenue raising taxes - income tax, VAT, national insurance and council tax. But income tax alone accounts for almost £480,000 of an average household's lifetime tax bill - that's 43 per cent!
4. You will work for around 20 years to pay it off (if you’re lucky)
When it comes to years required to pay off the lifetime tax, it is those in the bottom decile which have it toughest. It’ll take them almost 24 years just to pay their lifetime tax bill. That 24 years just for the taxman - more than half their working lives. At the same time, it is this group who will be hit hardest by soaring energy prices and the wider cost of living crisis.
5. Income tax and national insurance account for a majority of your bill
Worryingly, the lifetime tax burden has only been cut on four occasions since 1999-00 - once under Tony Blair, once under Gordon Brown and twice under David Cameron. These cuts have been dwarfed by significant increases in recent years, which is why ministers need to act now to cut the cost of living and ease the strain.
What happens now?
The government must take urgent action to support taxpayers and reverse the terrible trend of an ever-increasing lifetime tax burden. Remember, these figures don't even include the planned national insurance hikes!
With the fiscal headroom revealed in the latest public sector finance statistics, where better to start than by scrapping the planned rises in national insurance? Far better to Save to Spend than continue whacking up taxes on working taxpayers.