Embargoed: 00:01 Monday 31st January 2022
- TPA analysis of ONS data reveals the lifetime tax bill for average households reached over £1 million in 2019-20. The poorest households will work 24 years to pay off their tax bill, leaving 16 years of income for themselves.
Average households set to pay almost £180,000 in employer and employee national insurance contributions over a lifetime, even before the planned rise.
- Campaign group launches online tool to calculate your household’s lifetime tax bill, and is calling for Tory tax hikes to be scrapped.
Landmark analysis from the TaxPayers’ Alliance (TPA) has revealed that the average household will pay over £1.1 million in tax in their lifetime, meaning they would have to work for 18 years just to pay off the taxman.
Even before the planned rise in national insurance contributions and council tax, the average family would pay almost £180,000 and £80,000 respectively in their lifetime. This is alongside nearly £480,000 in income tax and £190,000 in VAT. Previous TPA research found the proposed health and social care levy would increase the average worker’s NIC contribution by over £430 every year.
Meanwhile the bottom 20 per cent of households, or families with a household income of £19,171, will work for almost 24 years to pay off their lifetime tax bill, the longest of any group. The lifetime tax bill for the top 20 per cent of households, or families with an income of £137,669, would be £2,573,815 in direct and indirect taxes, which would take them 19 years to pay off.
The figures show that the lifetime tax bill has almost doubled since 1977, only falling on four occasions during that time, including under prime ministers Tony Blair and David Cameron.
The TPA has launched a new online calculator, enabling users to calculate their own lifetime tax bill. In our case study, Hilary, an accountant, and her husband Mike, a retired teacher, from Croydon in London, found their lifetime tax bill was £1,060,145 using the calculator.
The research also shows it would take more than 33,500 average households’ total lifetime taxes to pay for the £37 billion Test and Trace budget. Taxes taken throughout the working lives of almost 14,000 households would cover just a single year of the 0.7 per cent foreign aid budget.
With the tax burden reaching the highest level in 70 years, the TaxPayers’ Alliance is calling for spending to be brought back under control as the country emerges from the pandemic, to protect hard-pressed households by scrapping the planned Tory tax rises and cutting families’ lifetime tax bills.
Over a lifetime – 40 years working and 15 years retired – an average household will pay £1,101,255 (in 2019-20 prices) in direct and indirect taxes. While household incomes have increased, the lifetime tax has almost doubled in real terms from the amount of tax the average household paid in 1977.
In 2019-20, an average household received income of £60,194. With this level of income it would take more than 18 years just to pay their lifetime tax bill.
Households in the bottom 20 per cent by income will pay £449,860 in direct and indirect taxes over a lifetime.
Households in the bottom 20 per cent received income of £19,171 in 2019-20. This means it would take them almost 24 years just to pay their lifetime tax bill.
Over a lifetime, households in the top 20 per cent by income will pay £2,573,815 in direct and indirect taxes.
The top 20 per cent of households received income of £137,669 in 2019-20. It would take them almost 19 years to pay their lifetime tax bill alone.
The total lifetime tax has fallen on only four occasions from the previous year since 1977. These were: 2002-03; 2008-09; 2012-13; and 2015-16.
Over a lifetime, an average household will pay £479,430 of income tax; £187,570 of VAT; £140,745 of employee’s national insurance contributions; £79,415 of council tax; and £37,435 of employers’ national insurance contributions.
- It would take more than 33,500 average households total lifetime taxes to pay for the £37 billion cost of test and trace and almost 4,100 to cover the costs of benefit overpayments in 2019-20 alone.
John O’Connell, chief executive of the TaxPayers' Alliance, said:
“With the tax burden at a 70 year high, typical families are now tax millionaires.
“Taxpayers already toiling half their working lives just to pay off the taxman cannot be asked to endure any further crippling tax hikes.
“Planned rises, like the national insurance hikes, must be scrapped.”
Hilary and Mike from Croydon in London, found their lifetime tax bill was £1,060,145 using the TaxPayers’ Alliance lifetime tax calculator.
Reacting to her results, Hilary, said:
"We couldn’t believe we’d pay over a million pounds in tax.
“It’s shocking to think about how different our lives would have been with that amount of money.
“Now we’re facing rising costs and our household budget is squeezed, I hope the government takes note and relieves us of its planned punitive tax hikes.”
TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)
Media Campaign Manager, TaxPayers' Alliance
24-hour media hotline: 07795 084 113 (no texts)
Notes to editors:
Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
TaxPayers' Alliance's advisory council.
The TaxPayers’ Alliance have launched their Lifetime Tax Calculator.
The TaxPayers’ Alliance found that the planned 1.25 per cent rise in national insurance would increase the average workers’ total national insurance bill to £4,662 per year.
- The TaxPayers’ Alliance began calculating the tax burden in 2018, this measure is now widely reported and has been adopted by the ONS.