£25k: What average UK family pays in tax a year

EACH family in Britain paid an average of nearly £25,000 in tax last year – a rise of £1,500 on the year before, according to a report.

Campaigners warned that people were paying more due to ongoing changes to the tax system, but that many were unaware they were doing so.

Figures also showed that the average tax paid over a lifetime per household would reach £823,439. The report, by the Taxpayers’ Alliance, calculated that the average household contributed £24,781 in tax in the financial year 2016/17.

Income tax accounted for £175.9billion of Treasury receipts, followed by £135.3billion in VAT and £125.9billion in national insurance payments.

But the study also highlighted many of the indirect taxes faced by homeowners, including duty on alcohol and tobacco, television licences and stamp duty, as well as air passenger duty, taxes on playing the lottery and car tax.

The alliance said the overall rise was likely to be due to changes in taxation rules and an increase in tax collection from national insurance and VAT, partly due to more people being in work.

John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘Continuous tinkering around the edges means that many people are paying more tax but are unaware they are doing so.

‘We know there is a squeeze on living costs, but one of the biggest bills that families face is the one from the taxman, yet we seldom hear politicians arguing that taxes should be cut.

‘With the tax system more complicated and opaque than ever, it’s time for fundamental reform to make it simpler, more honest and less of a burden on families and businesses.’

There were 27.1million households in the UK in 2016, according to the Office for National Statistics.

The average household, defined by the TPA as a person living alone or a group living together at the same address, paid £5,871 in income tax, £2,245 in NI contributions and £1,236 in council tax last year.

They paid £3,127 in VAT, while tobacco duty came to £356 per household, beer and cider duty came to £135 and wine and spirit tax came to £235. Lottery came to £61 and air passenger duty was £84.

Salaries have now been suppressed since 2010, while inflation has recently spiked at 2.9 per cent, meaning that the tax burden – the amount of tax paid as a proportion of income – is rising.

Earlier this year, the Institute for Fiscal Studies calculated that families and businesses face the heaviest tax burden for more than 30 years. It said that tax revenues will reach 37 per cent of national income in 2019/20 – the highest level since 1986/ 87 when Margaret Thatcher was in power.

But Britain will still be running a deficit of £21.9billion at that time as the Government spends even more on public services, welfare and other areas than it earns in tax.

The Government is currently engaged in a battle over relaxing public sector pay restraint, with Prime Minister Theresa May under pressure from ministers to rethink the 1 per cent limit for rises.

But it has caused a rift with Chancellor Philip Hammond who has warned that it will lead to tax rises for all other workers. The easing of the key austerity measure seems inevitable after dozens of Conservative MPs recently made it clear that they no longer support it.

Describing the outlook as ‘awful’, IFS director Paul Johnson said: ‘Another parliament of austerity is the sad prospect.’

‘Continuous tinkering’