November, 2012

Where Does Your Tax Go?

We all know how the Government takes our tax. Much of the tax we pay is on our income, either deducted through the Pay as you Earn (PAYE) system or through Self Assessment. The amount of tax we pay depends on our income and the tax allowances that we are entitled to.

But, where does the tax we pay actually go?

Using a tool developed by the tax transparency group Where Does My Money Go? we’ve worked out where your tax goes. We’ve assumed an annual salary of £40,270 although the tool assumes a 40 per cent rate of tax paid on all salaries. In reality, of course, you will pay different levels of tax depending on your income, spending and personal situation.

The chart below shows the daily tax contribution to each of the areas. In this example you pay £3.58 per day in tax for running government, £2.64 for defence and £7.93 per day for health.


The biggest portion of your tax payment – around one third – goes towards ‘helping others’. In our example, of your daily tax payment £14.71 to this area, £5.67 goes towards helping people in their old age, £2.33 towards helping people with sickness or a disability and £0.38 to help the unemployed.

The second largest area is health – around 18 per cent of your daily tax payment – with around one in eight of your tax pound going towards education.

At the other end of the scale, just 1.6 per cent of your tax goes towards the environment. In this example, 14p goes towards waste, 3p into environmental protection and 2p towards tackling pollution. This is compared to the £2.23 a day that goes to the military, the 34p a day that goes towards prisons and the 71p a day that it takes to run top-level government.

Are you happy with where your tax goes? Share your thoughts in the comments below.

Not getting the results you expected

Not getting the results you expected from our tax rebate calculator?

Follow our step by step guide to see where things might be going wrong:

Are you inputting the correct income?

 

  • Use your P60/P45 to help you input the correct income for the year. If you do not have a P60 or P45 you can use your pay slips or write to your employer and ask them for a statement of earnings, they are required by law to provide this.

 

  • The income that you input should be the ‘before tax’ amount, not the amount that you actually receive each month in your bank account.

 

  • Your income should be the amount that you earn between April 6th and April 5th of the next year. So if you were looking to check your tax rebate for the 2011/2012 tax year you would input all your income between April 6th 2011 and April 5th 2012.

 

  • The amount that you earned in the tax year may be different from your annual salary. For example your employer may pay you £30,000 per year. However if you started working part way through the tax year or stopped working before the tax year ended your income may be less than your £30,000 salary.
  • Remember to include all income, including job seekers allowance or any other benefits that you may have received.

 

Are you inputting the correct amount of tax?

 

  • Check your P45, P60 or statement of earnings for the amount of tax that you paid through your employer.

 

  • Only include PAYE tax, not national insurance or any other deduction that you might consider to be a tax.

 

Which tax year are you checking for?

 

  • If you are checking for the current tax year you will only be able to claim a tax refund if you have stopped working and will not work again until the end of the tax year (April 5th), for example if you are leaving the UK.

 

  • If you have wait too long you may have missed the 4 year limit to make a claim.

 

  • You can reconcile using our tax calculator why you aren’t getting the results you are expecting with our tax refund calculator. Input your income and it will tell you how much tax you should be paying.

How much tax should I pay on….

We have created a quick reference table so that you can easily work out how much tax you should be paying on your salary in the 2012/2013 tax year. If you have any questions please leave them in the comments section below.

 

Annual Income

Tax

National Insurance

Take Home Pay

£10000

£379

£270

£9351

£12000

£779

£510

£10711

£14000

£1179

£750

£12071

£16000

£1579

£990

£13431

£18000

£1979

£1230

£14790

£20000

£2379

£1470

£16151

£22000

£2779

£1710

£17511

£24000

£3179

£1950

£18871

£26000

£3579

£2190

£20231

£28000

£3979

£2430

£21591

£30000

£4379

£2670

£22951

£32000

£4779

£2910

£24311

£34000

£5179

£3150

£25671

£36000

£5579

£3390

£27031

£38000

£5979

£3360

£28391

£40000

£6379

£3870

£29751

£42000

£6779

£4110

£31111

£44000

£7484

£4217

£32299

£46000

£8284

£4257

£33459

£48000

£9084

£4297

£34619

£50000

£9884

£4337

£35778

£52000

£10684

£4337

£36939

£54000

£11484

£4417

£38099

£56000

£12284

£4457

£39259

£58000

£13840

£4497

£40419

£60000

£13884

£4537

£41579

£62000

£14684

£4577

£42739

£64000

£15484

£4617

£43899

£66000

£16284

£4657

£45059

£68000

£17084

£4697

£46219

£70000

£17884

£4737

£47379

£72000

£18884

£4777

£48539

£74000

£19484

£4817

£49699

£76000

£20284

£4857

£50859

£78000

£21084

£4897

£52019

£80000

£21884

£4937

£53179

£82000

£22684

£4977

£54339

£84000

£23484

£5017

£55499

£86000

£24284

£5057

£56659

£88000

£25084

£5097

£57819

£90000

£25884

£5137

£58979

£92000

£26684

£5177

£60139

£94000

£27484

£5217

£61299

£96000

£28284

£5257

£62459

£98000

£29084

£5297

£63619

£100000

£29884

£5337

£64779


If you want to work out how much tax you should be paying on an amount that is not listed in the table above then use our free tax calculator. If you have any questions, please ask them in the comments below and we will do our best to answer them.