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.

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