GB News: Sajid Javid could replace Rishi Sunak as Chancellor
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We are all working for 18 years of our lives on average, simply to pay the Treasury. Incredibly, the poorest Britons work 24 years for the taxman, and only 16 years for themselves.
These shock figures come from the Taxpayers Alliance (TPA), whose media campaign manager Danielle Boxall said that in future we will have to work even harder for the Treasury.
As UK taxes hit their highest level in 70 years, the average total lifetime tax bill will rocket way past £1.1 million.
Boxall said: “Taxpayers are already toil half their working lives just to pay off the taxman, and that was before this year’s crippling tax and National Insurance hikes.”
Incredibly, the poorest 20 percent of households pay a higher proportion of their income to HMRC than better-off taxpayers.
That is because indirect taxes on spending such as VAT, fuel, alcohol and cigarette duties eat up a relatively higher chunk of their incomes.
So for every year they work for themselves, they work TWO years for HMRC.
The lifetime tax bill for the top 20 percent of households is £2,573,815. That would take higher earners 19 years to pay off.
Boxall said there is never a good time to increase tax and NI, but Chancellor Rishi Sunak could not have picked a worse moment than now, as living costs rocket. “Ministers must do more to ease the burden on hard-up households.”
She called for spending to be brought back under control as the country emerges from the pandemic, and for taxes to be cut.
Sunak has pledged to do “everything in his power” to help Britons through the cost of living crisis, and hinted that this could include tax cuts.
One option floated is cutting basic income tax by a penny to 19p in the pound this year, instead of 2024 as he suggested in March.
Yet hard-pressed taxpayers have good reason to be sceptical.
The Conservative Party is supposed to be in favour of tax cuts yet has managed to drive our personal tax burden to its highest level in 70 years.
Sunak’s move to freeze the income tax, inheritance tax (IHT), capital gains tax (CGT) and pensions lifetime allowance (LTA) thresholds for will cost us £7.5 billion this year alone.
That will rise to £40 billion over the five-year freeze, according to the the Centre for Economics and Business Research.
This is on top of the £12 billion a year raised by the hated 1.25 per cent National Insurance health and social care levy, which came into force on April 6.
Britons also pay VAT, council tax, fuel duty, vehicle excise duty and stamp duty tax on property purchases.
On top of that, we pay air passenger tax and insurance premium tax, and duties on spirits, beer, cider, wine, tobacco, betting and gaming.
Many fail to realise the danger until stealth taxes creep up and bite them personally, said Mark Routen, in-house tax specialist from Hoxton Capital Management. “They’re usually introduced between elections, in the hope that the tax increase will be forgotten by the time people go to vote.”
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Tax freezes typically last for many years longer than originally planned, warned Tim Walford-Fitzgerald, partner at accountancy firm HW Fisher. “The IHT nil-rate threshold has actually been frozen at £325,000 since 2009. House prices have rocketed since then, drawing more middle income families into the net.”
Rebecca Durrant, head of private client at tax and advisory firm Crowe, warned that today’s raging inflation will worsen the impact of fiscal drag, by driving up the value of asset prices and wages.
The best way to fight back is to take advantage of all your tax allowances.
Options include investing inside an Isa, gifting money to reduce your IHT tax bill, or sharing assets with a lower partner to reduce CGT when you sell.
However, this is another area where tax complexity works in favour of the Treasury. Most people fail to max out their allowances, because they are so difficult to understand.
Which suits the Treasury.
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