Average UK household will pay £826,030 in tax over a lifetime

Over a lifetime, an average UK household will pay £826,030 in direct and indirect taxes (in 2014-15 prices), a rise of 2.7 per cent compared with the previous year, according to a recent analysis by the Taxpayers’ Alliance (TPA).

A family with average 2014-15 household earnings of £41,027 would take over 20 years to pay their lifetime tax bill of an estimated £826,030, the TPA said.

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The average UK household’s lifetime tax bill will be over £800,000.

The campaign group calculated the amount based on the current level of taxes applied over a working lifetime of 44 years and 15 years of retirement.

Over a lifetime, an average household will pay:

  • £287,963 in income tax (net of tax credits).
  • £169,371 of VAT.
  • £107,045 of Employee’s National Insurance Contributions.
  • £65,068 of Council Tax (net of council tax rebates).

Household tax bill by income

An average household in the bottom 20 per cent by income will pay £319,732 in direct and indirect taxes over a lifetime, up 2.2%. Those within this group had a gross income of £13,841 in 2014-15 and it would take just over 23 years for them to pay their lifetime tax bill.

Direct taxes are imposed on our incomes, company profits and assets, while indirect taxes are applied to things we spend our money on, and include VAT, sales tax, etc.

An average household in the top 20% per cent by income will pay a lifetime tax bill of £1,686,970, up 4.3%. It would take more than 19 years to pay their lifetime tax bill.

The research uses information from the ONS’s Effects of Taxes and Benefits on Household Income, 1977 to Financial Year Ending 2015.

Alex Wild, Research Director, said:

“For many years, politicians have cited the high cost of living in the UK as a major challenge in need of a policy response. However, all too often it is government policy that causes the high cost of living.

“For example, energy bills rise because of ineffective “green taxes” and from 2018 the cost of the weekly shop will increase because of the Soft Drinks Industry Levy.

“All told, tax is a big contributor to the high cost of living.”

TPA chief executive John O’Connell said: “Politicians are forever lamenting the high cost of living yet all the while adding to the burden through higher taxes.

“Tax bills for households in every income group have gone up over the last year and that has obvious implications on hard-pressed families, already struggling with ever-rising bills.

“If we are to start living within our means as a country the Government simply must tighten its belt and take the task of finding savings seriously. With a new administration in place, now is the time to introduce radical reforms to our tax system and spending priorities to ease the pressure on ordinary taxpayers and boost economic growth.”