How many percentage of our pay is cut???

The average UK citizen works from New Year's Day to May 24th solely to pay their taxes - the so-called 'Tax Freedom Day'. Effectively, for a third of a year everyone in this country is a civil servant.

However I have looked at this and think that the publicly quoted 'Tax Freedom Day' is actually much later than that.

How Little Of 拢100 You Get To Keep ...

Of 拢100 earned, 11% is paid in National Insurance contributions (basically tax!) and 22% is paid in Income Tax (40% for higher rate taxpayers).

Of the remaining 拢67 of take-home pay let's say that over a week you spend it like this:

拢15 for a meal out
拢8 on cinema tickets
拢16 in petrol
拢3 put by for electricity
拢7 on some cigarettes
拢9 on a few drinks down the pub
拢4 paid out in insurance premiums
拢3 put aside for Council Tax
拢2 put by for Road Tax

Obviously 100% of the last two items are wholly tax.

Your electricity bill is subject to 5% 'Value Added Tax'. Your insurance policy is also subject to a 5% 'Insurance Premium Tax'. When you spend anything at the cinema and eating out, 17.5% is automatically added to the bill to be given to the government in VAT. While you're enjoying yourself, so is the Treasury.

35% of your drink at the pub goes to the government, and a recent AA campaign followed by the picketing of oil refineries remindede us that 85% of the money spent on petrol is snatched by the taxman. The state loves a smoker, of course, and from the money spent on cigarettes 88.9% enters its coffers.

Altogether, 拢29.91 of that week's expenses goes straight to the taxman.

So of the 拢100 earned, 拢62.91 will have been paid to the government in tax.

At the end of the day, all you will have to show for your 拢100 of earnings is 拢37.09 in goods and services. A higher-rate taxpayer will retain a miserly 拢29.09! And that ignores the additional 拢12.80 your employer will have had to pay to the government as well.

And that calculation ignores the host of taxes on business, airport taxes, capital gains tax ... and then there's stamp duty, where you hand over thousands just because you decide to move house!

The REAL 'Tax Freedom Day'

All this means that the real 'Tax Freedom Day' - the day a basic rate taxpayer actually starts earning for himself rather than the Government - is 18 AUGUST!!

The average worker in the UK paid 拢6.63 an hour in tax to the Treasury in the 2007/8 tax year last year - more than the minimum wage and 5.6 per cent more than a year ago. The figures, calculated by The Daily Telegraph, and published by them on 22 March 2008 are taken from documents published by the Treasury at the time of the 2008 Budget statement.

Presuming each of the 31.6 million taxpayers in the country works an eight-hour day, and takes the standard time off for holiday, they contributed on average 拢6.63 for every hour that they worked. In the 2006/7, 31.2 million taxpayers contributed 拢6.28 each.

Breakdown of 拢6.63 tax paid by average workers each hour for 07/08 tax year:

Income tax 拢3.57
VAT 拢1.37
Alcohol and tobacco duty 拢0.28
Inheritance Tax 拢0.07
Council Tax 拢0.40
National Insurance 拢0.70
Stamp Duty 拢0.24
Capital Gains Tax 拢0.08
Fuel Duty 拢0.42
Vehicle Excise Duty 拢0.10
Others (e.g. air tax) 拢0.40

Makes your eyes water! No wonder we are one of the most heavily taxed nations in the free world.

David Nicoll
"the accountant with attitude"

Good question...

as from the new tax year (6th april 2008) the first 拢5,435 of your annual income (excluding savings and dividend income) is tax free after that...deductions are made:

the next 拢30,565 taxed at 20%
then anything over 拢36,000 is taxed at 40%

After that employee's pay class 1 national insurance contributions which are 11% of all income above certain limits then 1% on the upper limits. Self employed individuals continue to pay class 2 and 4 NIC.

So after all those deductions you get your disposable income which then you spend on goods and services which are subject to all sorts of taxes...VAT, custom and excise duties etc.

The true amount of deductions depends upon your income, age, martial status and then your expenditure

Quite a lot if you're talking tax man.
First he taxes us 10% on part, then 22% on the next part, and up to 40% if you're a big earner, and thats before you get your wages.
When you get your wages, you need fuel for your car, it's taxed, electric, phone, insurances, all taxed. heat for your house, taxed.
You go out for a meal, guess what you're taxed.