Highest UK taxes since 1950’s

Highest UK taxes since 1950’s

It is reported that we are seeing Highest UK Taxes since 1950’s with a staggering 7% increase.

In the 1950s taxes accounted for just under a third of GDP at 27.5% which was £5.8bn, since then tax revenue rose to £627.9bn in 2018-19.

This is forecast to rise in 2019-20 to £757bn, equivalent to a per capita GDP contribution of £14,000 per adult. shows an Institute for Fiscal Studies (IFS) report.

This increase is due to tax reforms in 2010 which increased tax revenue by about £20bn overall, despite large giveaways increasing the income tax personal allowance to £12,500, cutting the headline rate of corporation tax 19% and freezing fuel duties.

The proportion of income tax is forecast to stay at 34.6% from 2020–21 to 2023–24.

Tax-raising measures, including rises in VAT and national insurance contribution (NIC) rates, exceed these giveaways overall in revenue terms.

Internationally the UK tax take is near the average for developed countries, and lower than in most of western Europe. The highest tax to GDP ratio was France at 46.2% in 2017. The global average in that year was 34.2% according to the OECD. Ireland was the 34th OECD country with 22.8%.

Income tax, NICs and VAT provide almost two-thirds of tax revenue. Other countries typically raise more from social security contributions and less from property taxes.

As it now stands the top 1% of the population pays over a third of all income tax, but only 58% of adults are liable for income tax at all.

The top 1% have seen their share of total income tax payments rise from 25% to 30% since 2010 as policy reforms particularly under the coalition, increased income tax for the best off while reducing it for those on more average incomes.

Alongside taxes the government receives revenue from other sources, such as profits of public sector bodies and interest on student loans. Total tax revenue, at 36.9% of national income (£811bn, or £15,000 per adult), is at its highest level since the 1980s, the IFS study shows.

Read our other blogs here

Subscribe to our Newsletter

Keep Up-to-date with the latest TAX And Accountancy news

Limited company Formation

From AJR & Co Ltd