Do you realise how much tax you are paying for every £100 earned? If not, read on…
We all know taxes are a bind. As the saying goes, there’s nothing more certain in life than death and taxes. We don’t like paying them, but we think they’re inevitable, so we put our heads down and every month pay 22% from our wages to the Government. We may even grumble a bit when we see the amount taken for tax on our wage slips.
But you’d grumble a lot more if you knew that actually for every £100 you earn you actually pay £64.88 – all you get to live on after the Government has finished with you is £35.12.
Sound unbelievable doesn’t it? Essentially, you actually work from New Year’s Day until May 24th – a third of the years – just to pay your taxes. It doesn’t matter whether you spend it, save it or leave it sitting there, you’d be taxed in scores of different ways.
So just how many ways can the Government tax you?
Straight away when you are paid the Government takes 22% off you in Income Tax. If you’re a higher rate tax payer that rises to 40%. Of your £100, £78 is left. Then there are your bills – you might put aside £3 for Council Tax, £2 for Road Tax and say £3 for the VAT on our utilities bills, which are charged at 5%.
Now you’re down to £70. But then there is the tax on the insurance premiums for your property and possessions – about 4% or £4 – taking you down to £66.
Now let’s say you fancy going out for the evening. You put £16 worth of petrol in the car and drive to a restaurant where you spend £15 on a meal. On the way you stop off and buy a packet of cigarettes at £7. After your meal, you go to the cinema and pay £8 for tickets for the latest blockbuster. Later on you fancy a drink at your local and you spend £9.
How much in tax has your evening cost you?
First is the petrol. According to the AA, a staggering 85% of the cost of petrol is tax which goes straight into the Government purse. The meal and the cinema will have been taxed at 20% VAT, so your evening’s enjoyment has boosted the Government coffers by £4.60. Your £9 round of drinks has automatically added in 35% or £3.15 to your growing tax bill.
Finally to add insult to injury, that £7 packet of cigarettes you just purchased is actually worth a miserly 77p – the tax you pay is an astonishing 88.9%. No real surprise the Government doesn’t really want smokers to quit given they’re such a cash cow for them.
Bottom line, if you are a standard rate tax payer, £64.88 of your £100 has been paid to the government in tax.
But it doesn’t end there.
Don’t forget about all the other little tax ruses the Government has come up with:
- Stamp duty
- Business tax
- National insurance contributions
- Airport tax
- Capital gains tax
- Inheritance tax
- Savings tax
And of course that’s before the European Union (EU) has its say. Currently, the EU is making a fuss about ‘harmonising taxes’ which is a shorthand way of saying that they believe the UK, which is probably the lowest taxed community in the EU, should be paying as much as them.
So in addition to the £11 you currently pay to the EU in your tax bill, it’s suggesting you should be paying more income tax and more purchase tax. We’ve already had to stomach a 2.5% VAT increase from 17.5% to 20% – now the EU is suggesting it should be higher and so should our income tax.
The long-term consequences of all of this tax paying will have a detrimental effect on your life and the lives of your children and grandchildren. You will spend more than 40 years of your life working to keep the tax coffers healthy instead of building a secure future for your family.
Your hard-earned money goes towards covering the ever-increasing bills caused by MP’s expenses, bank bailouts and nationalisation of failing businesses thanks to carelessness, over-spending and sometimes plain old cheating.
It could be a plot of a crime novel…
If you are struggling with your debts there are many solutions available to you, such as IVA’s, Debt Management, Trust Deeds or Debt Relief Orders which can help you back on your feet financially.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here