While the General election is dominating the headlines, political parties are promising big spends on all the usual political hotbeds – healthcare, education, defence etc, here Avanti explore how the funds will be raised from you, the Great British taxpayer.
Tax Rates At All Time High
The two most common forms of tax are income tax and National Insurance contributions – the levy you pay on your salary before it lands in your bank and the payment made which entitles you to qualify for a state pension and benefit from certain public services. Combined, these two taxes help to raise almost 50% of all tax collected in the UK today, which incidentally is at its highest rate since the 1940s.
Unlike some other countries, a middle earner in the UK on an average salary of £28,000 will be a 28% tax rate payer– compare this to Belgium where this is 49% and 67% for a higher earner on a salary of approx. £340,000. If the UK were to move to a more European based taxation structure, it is middle earners who could see the biggest difference to their pocket with a staggering 20% difference on current rates.
What About Other Taxes
When it comes to other taxes, we see that the UK takes a similar stance to our European neighbours, collecting 20% VAT on applicable services and items and 19% Corporation Tax.
Factor in, road tax, council tax, stamp duty and so on, it is easy to see how we reach 70% of income being raised for Government spending via taxation, but with food (exclusions apply) and children’s clothes being zero rated , it is estimated that the Government also misses out on a potential £57Billion every single year.
It does seem to be a common opinion that following years of austerity spending is needed, but we must also be mindful that how we raise the income to fund it could affect some of the most vulnerable in society.
Is your accountant ensuring that all of your relevant tax breaks are being claimed? Are they proactively advising you of how to retain funds in your business for longer? The team at Avanti do all of this, and work hard to give you the information you need in a friendly jargon free manner. Give us a call today to see how we can move you and your business forward.