Who doesn’t love pay day? When this highly anticipated date rolls around, most of us finally have enough money in the bank to pay off those pesky utility bills and maybe even spoil ourselves with a treat or two! However, many of us wish we earned a higher salary, especially in the wake of unwelcome deductions by the taxman, detailed on our wage slips.
Most of us lose approximately one fifth (20%) of our wages to Income Tax and National Insurance contributions: in tax year 2013/14 the first £9,440 of everyone’s earnings are entirely tax free. The more we earn, the more we pay: employees start paying 40% on all earnings above £32,000. For earnings above £150,000, you can expect to pay 45% (these figures for tax year 2013-14 are applicable after 6 April). In addition, during tax year 2012/13, the Government collected more than £91 million in National Insurance payments from the country’s workforce.
But how exactly does the government spend this incredible amount of money in a way that benefits the UK, and its citizens? Our ‘Wage Slipping’ infographic, included below, aims to shed some light on this query.
Of course, Income Tax and National Insurance are not the only deductions one can see taken from their salary. Student loan repayments haunt graduates for a minimum of 25 years (with remaining balances written off after this time for those who enrolled in academic year 2006/07 or thereafter).Some other employees may have deduction from earnings orders applied, should they be the parent of a child they do not reside with, for example.
It might also be the case you have a percentage of your salary deducted and paid into an optional pension scheme. Soon, both employers and employees will be obliged to contribute to a compulsory pension order. While it is expected the majority workers will contribute just 4% of their salary (projected 2014 figure), it’s likely most will have even less money to spend on luxuries after meeting the costs of life’s necessities.
Does your tax revenue go to waste?
myfuturerole.com would love to hear what you think of our infographic – do any of the stats above surprise you? Would you have expected more money from Income Tax to be allocated to the police by the government, than to the transport industry, for example? Tell us what you think about the impact of taxation in the comments below.