I thought it would be fun for us all to work out what the average tax take is for the average UK citizen.

Once we have worked out the take home pay for the average worker, we can then work out all those other little hidden things, like fuel, VAT, food, pensions, etc. Between us we should be able to get somewhere :)

I'll start the ball rolling. The average UK income for a UK male in December 2005 was £31,500 (http://www.incomesdata.co.uk/report/view942.htm).

Who can work out and fill in the following gaps...?


Income for average working man: £31,500.
_______________________________________
Less:
Income Tax £ ?
National Insurance £ ?
Employers Contributions £ ?
_______________________________________

Remaining income: £ ?
_______________________________________

I thought it would be fun for us all to work out what the average tax take is for the average UK citizen.

Once we have worked out the take home pay for the average worker, we can then work out all those other little hidden things, like fuel, VAT, food, pensions, etc. Between us we should be able to get somewhere :)

I'll start the ball rolling. The average UK income for a UK male in December 2005 was £31,500 (http://www.incomesdata.co.uk/report/view942.htm).

Who can work out and fill in the following gaps...?


Income for average working man: £31,500.
_______________________________________
Less:
Income Tax £ £5,602.30
National Insurance £ 2,927.32
Employers Contributions £ 3424.64
_______________________________________

Remaining income: £ 22,970.38
_______________________________________


Scandalous:rant:

Maybe it's worth clarifying what is meant by 'average' in this case:

The ASHE gives both median and average earnings figures. The difference between these two measures is significant. The median is the level at which half of the sample are above and half are below. The average is the total earnings divided by the number in the sample. Because the earnings distribution is very skewed, a small number of employees with extremely high earnings pull up the average figure well above the median. When looking at the annual earnings of men, the average of £31,515 is much higher than the median of £25,112. This is because the highest-paid individuals on very large salaries pull up the average figure significantly.

To quote the site that the figure came from.

:)

If we cut to the chase and use The Adam Smith Institute (http://www.adamsmith.org/tax/technical.php)'s calculation of "Tax Freedom Day" we can calculate the total (direct and indirect) tax burden.

Tax Freedom Day in 2005 was calculated to be June 10th.
That indicates a total Tax Burden of 44% (161 days as a %age of 365).

Applying that 44% to your average income of £31,500 gives a tax burden of £13,860.

Maybe the average persons tax burden would go down if everyone paid their fair share. Unfortunately there are too many people out there who avoid or evade tax.

Keeps me in a job mind you, I'd be screwed if everyone coughed up what they owed. :)

Aww come on cgksheff - don't take the fun out of it :(

I had hoped that we would have a few revelations, shocks, surprises (both nice & nasty) and a greater understanding by the time we had finished.

Can we start over?

Taxman... can you do the basic take home / deductions sum based on £31,500?

Now I'll admit, I'm not a tax payer - I'm a student, but folk will whinge when their police service, ambulance, fire, education, etc services are poor, yet, aren't prepared to pay a little more for a decent service.

Example: I had to call upon the Met.'s services not so long ago - they arrived at the scene at 2125, after calling them at 2121 - now that is a decent service - yet, our council tax is £2072.28 - had it been absurdly cheap, the response time may have been slower - alright, alright, they may of course have been in the area... :P

Aww come on cgksheff - don't take the fun out of it :(

I had hoped that we would have a few revelations, shocks, surprises (both nice & nasty) and a greater understanding by the time we had finished.

Can we start over?

Taxman... can you do the basic take home / deductions sum based on £31,500?

Haven't brought my tax tables home with me but if this thread is still active tomorrow when I'm at work then I'll do the calcs based on a monthly salary.

Employers NI contributions aren't deducted from pay - the sum in the original proposition should be earnings less income tax less employees NI contributions = remaining income.

IMO the Employers NI should be included as it's a direct part of the employees package, even thought the employee never sees it.

OK but to make the sums work properly this would need to be added to basic pay in your original proposition.

Err, you've lost me longcol. Employers NI is an additional amount on top of what they employee sees and pays as his own NI.

Err, you've lost me longcol. Employers NI is an additional amount on top of what they employee sees and pays as his own NI.

Employers NIC is just a tax on the employer, it really has nothing to do with National Insurance. It is only the Employees NIC that confers benefits such as income support and pension credits

Yes, but my angle is that without the employee there is no contribution, ergo it's included. Would that sound reasonable as part of this exercise?

(this is what I meant about us thinking about interesting stuff along the way ;))

Yes, but my angle is that without the employee there is no contribution, ergo it's included. Would that sound reasonable as part of this exercise?

(this is what I meant about us thinking about interesting stuff along the way ;))

Employers sometimes add it the gross wages they pay when they are calculating employee costs but I don't think you could use it for this exercise because the figure for gross average wage, £31,500, you used in the OP would not have included it.

Although you could use it to see how much revenue that persons £31,500 brings into the exchequer

That's what I was aiming for - how much we are each responsible for contributing. At the end of the day its a direct employment tax relating to the individual. I do see your logical reasoning though.

However it is not a deduction from the £31,500 average pay.

If we are to speculate "how much does each individual contribute to the exchequer" then, if we include taxes on the employer, we start getting in to the realms,for example, of how much corporation tax a company pays could be attributable to the labour of an individual employee.

I think the thread more productive if kept fairly simple.

It's a fair point, but other taxes are dependant on variables, whereas NIC is due regardless of profit or loss and is a tax sum directly attributable to the individuals salary, albeit one not entirely included within the salary itself.

No salary no NIC. That's why I suggested including as an individuals contribution, because I would argue that it is, despite it being an employer liability.

That said, if the consensus is to to discount employers NIC contributions for clarity let's do so. I'll go with the flow on that :)

Aww come on cgksheff - don't take the fun out of it :(

I had hoped that we would have a few revelations, shocks, surprises (both nice & nasty) and a greater understanding by the time we had finished.

Can we start over?

Taxman... can you do the basic take home / deductions sum based on £31,500?


Based on a monthly salary of £2625, at a 489L tax code, for 2005-06

Tax - £5601.42
EE NIC - £2927.77
NET Pay - £22970.81

(ER NIC - £3406.80)

You are forgetting all the hidden taxes. Such as income tax. We pay PAYE tax then go to the shop and do the weekly grocery shopping and an additional 17.5% on top of that.

Inheritance tax. Stamp duty, airport taxes, insurance premium tax .. oh the list goes on. :rolleyes:

That's what we're going to work out in this thread fox - some sort of average percentage :)

Thanks Taxman :thumbsup: So, using those figures we have an initial tax take (exclusing ENIC ;)) of

Basic salary £31,500.00 100%

Tax £5,601.42
EE NIC £2,927.77
Total salary deductions £8,529.19 27%

Remaining salary £22,970.81 73%


What can we do next? How Fox's biggie like annual expenditure on groceries. Can anyone work out some averages for an average family?

Well a report said the annual fuel bill is approx £1000

say a family food shop averaging £5,200

Petrol ? (dont have a car so no clue)

Insurance Premium tax is 6% average insurance prem. £350.00

Employers NIC is just a tax on the employer, it really has nothing to do with National Insurance.
Except for its name. If the employer didn't have to pay this extra 13%, he would be able to pay out more wages. When Employers NI went up by 1%, I bet this came off potential pay rises that year.

What I think is unfair is the lack of sharing allowances between spouses: If I earn all the money for my household, I will pay quite a bit of my tax in the higher band of 40%, but if both partners share the earning, no 40% tax needs to be paid, and the tax-free allowances are doubled. The same money is being earned, but more tax has to be paid (or the children are dumped on childminders).