Introduction
Since its foundation, the TaxPayers’ Alliance has consistently shown the impact of taxation on the public and businesses. Today, households and companies face mounting economic pressures alongside a tax burden at its highest level since 1949-50. Inflation remains above the Bank of England’s two per cent target at 3.8 per cent, almost double the level when the current government took office.[1] Interest rates, while falling from recent peaks, remain elevated at four per cent following a cut in August 2025.[2]
In 2025-26, the tax burden stands at a 76-year high and is projected to reach a record high next year.[3] With Labour’s autumn budget approaching, there is growing concern that taxes will rise to pay for an even more bloated state. Against this backdrop, it is important to understand the full lifetime effect of taxation on households.
Over a working life, households contribute through direct taxes such as income tax and national insurance contributions as well as indirect taxes like value added tax (VAT), fuel duty, alcohol duty and television licences.
This note estimates the total amount of tax paid by different types of households over a lifetime. For the purposes of this note, a lifetime is defined as 60 years. This assumes 45 years in work, from 21 years old to the state pension age of 66,[4] and 15 years in retirement. The data is provided in quintiles to show the effect of taxation across a range of household income groups. The note also tracks the historic rates of lifetime tax to illustrate how the amount of tax paid over a lifetime has changed.
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Key findings
- An average household during their lifetime - 45 working years and 15 years in retirement - will pay £1,277,580 in direct and indirect taxes (in 2022-23 prices), an increase of £21,915 (1.7 per cent) from 2021-22 in nominal terms.
- After adjusting for inflation, the average lifetime tax fell 5 per cent from £1,344,632 in 2021-22 to £1,277,580 in 2022-23, as inflation in 2022-23 outpaced growth in nominal household taxes. By 2024-25, the average lifetime tax is expected to have grown in real terms once again.
- The average lifetime tax has almost doubled in real terms from the amount paid in 1977, the first-year data is available. In 1977, the average household paid an inflation-adjusted lifetime tax of just over £644,340, by 2022-23 this had increased by 98 per cent to £1,277,580.
- The average household gross income in 2022-23 was £66,060. This means the average household would have to devote 19.3 years’ worth of gross income to pay their lifetime tax bill.
- Households in the bottom 20 per cent by income face the heaviest burden relative to income, paying £541,590 in taxes over a lifetime. The average gross income of those in the bottom 20 per cent of households was £23,278 in 2022-23. Accordingly, it would take 23.3 years to pay off their tax bill.
- Between 2021-22 and 2022-23, the bottom 20 per cent of households saw their lifetime tax burden increase by £79,110 (17.1 per cent) from £462,480 to £541,590. This was the largest percentage increase of any income group and nearly 4 times the 4.7 per cent increase faced by the average household.
- The top 20 per cent of households in the UK will pay £2,880,870 in taxes over a lifetime. The average gross income for these households was £141,494. For the highest earners, paying off their lifetime tax would take over 20 years.
- An average household over a lifetime will pay £571,740 in income tax; £194,505 of VAT; £179,070 of employee’s national insurance contributions; £99,690 of council tax; and £45,330 of employers’ national insurance contributions.
- It would take 2,149,846 average household lifetime taxes to pay off the national debt and 1,063,938 to cover unfunded public sector pension liabilities.
- The nominal value of the Chagos agreement payments would require 36,797 lifetime taxes, while annual asylum system costs in 2023-24 cost 4,210 lifetime taxes.
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[1] Office for National Statistics, Consumer Price Inflation, UK: July 2025, 20 August 2025, www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2025 (accessed 27 August 2025).
[2] Bank of England, Bank Rate reduced to 4% - August 2025, 7 August 2025, www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/august-2025 (accessed 27 August 2025).
[3] Office for Budget Responsibility, Public finances databank – August 2025; National Account Taxes Aggregates (per cent of GDP), 21 August 2025, obr.uk/download/public-finances-databank-august-2025/?tmstv=1756886059 (accessed 27 August 2025).
[4] Age UK, State Pension, www.ageuk.org.uk/information-advice/money-legal/pensions/state-pension/
(accessed 27 August 2025).