Taxpayers in the UK are working two days longer on average in 2015 than in 2014 before they stop paying taxes and start earning for themselves, warns ACCA (the Association of Chartered Certified Accountants). Tax freedom day – calculated annually by the Adam Smith Institute – falls on 31 May.
The date at which tax freedom day arrives has been steadily rising with the nature of the UK tax system – especially with the sheer number of indirect taxes that exist – means UK households are now left with less money and are paying more to the government. This is despite five years of raises in personal allowance.
Chas Roy-Chowdhury, ACCA head of taxation, said: “The rises in the personal allowance have created a huge amount of fiscal drag. More and more people are being caught in the 40% tax bracket. At the end of the 1980s only 500,000 people were paying the higher rate of tax, now that is more than four million people. So despite all the Government hype on increasing the personal allowance we are actually two full days worse off this year before our income is ours to keep.