2006
(16/11/2006) Britons pay £211,686 in lifetime indirect taxes - more than the cost of the average home
British households are paying a staggering £211,686 over their lifetimes in indirect taxes (expenditure-based taxes), according to new analysis conducted by AXA.
The findings, based on Government statistics, finds that average households in Britain today pay £115,508 in VAT, £34,246 on tobacco and alcohol excise taxes and a staggering £5,108 on betting taxes (including National Lottery taxes) over their lifetime.
In addition, Britain's pay £5,804 in television licence tax, £2,728 on insurance premium tax and £26,933 on petrol and oil hydrocarbon fuel taxes.
Motorists in Britain are also hit with vehicle excise taxes which cost the average British household £7,836 over their lifetime.
The findings, based on analysis of Government statistics by AXA Wealth Management, finds that Britons are paying more in indirect taxes over their lifetime than the £199,000 cost of the average family home.
"It's said that the only thing you can be certain of is death and taxes and our findings highlight just how much additional tax the average British household is paying for goods and services out of their already taxed income," states AXA Wealth Management's Colin Nelson.
"Unfortunately paying tax is a part of life and there is really little we can do to avoid it, aside from reducing activities and purchases which incur these indirect taxes (such as selling the motor car, getting rid of the TV and turning tee-total).
"Understandably many Britons will feel that these are not particularly attractive options, and instead we strongly encourage people to see an independent financial adviser and ensure they have long term savings plans in place to ensure they capture and are able to enjoy as much of their earnings as possible."
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Notes to Editor
The findings were calculated as follows:
Taxes paid by household
| Original income | Amount £ |
|---|---|
| Wages and salaries | 21,242 |
| Imputed income from benefits in kind | 337 |
| Self-employment income | 2,695 |
| Occupational pensions, annuities | 2,171 |
| Investment income | 858 |
| Other income | 266 |
| Total | 27,569 |
| Total Gross Income (inc. state benefits) | 31,884 |
ONS TABLE 14A (Appendix 1) details average incomes, taxes and benefits by quintile groups of ALL households, 2004-05
Gross income is listed as £31,884 pa for the average UK household.
Incomes, taxes and benefits per household are detailed in the ONS table below. We have worked this out as a proportion of the average annual household income to identify what percentage of household income is spent on each of the costs detailed below:
| Direct taxes and employees' NIC | Amount paid pa £ | Percentage of gross income |
|---|---|---|
| Income tax | 4,411 | 13.83453% |
| less: Tax credits | 155 | 0.48614% |
| Employees' NI contributions | 1,435 | 4.50069% |
| Council tax and Northern Ireland rates | 953 | 2.98896% |
| less: Council tax benefit / Rates rebates | 121 | 0.37950% |
| Total | 6523 | 20.45854% |
| Disposable income | 25,360 | 79.53833% |
Taxes on final goods and services
| VAT | 1,990 | 6.24137% |
| Duty on tobacco | 306 | 0.95973% |
| Duty on beer and cider | 121 | 0.37950% |
| Duty on wines & spirits | 163 | 0.51123% |
| Duty on hydrocarbon oils | 464 | 1.45528% |
| Vehicle excise duty | 135 | 0.42341% |
| Television licenses | 100 | 0.31364% |
| Stamp duty on house purchase | 169 | 0.53005% |
| Customs duties | 29 | 0.09095% |
| Betting taxes | 34 | 0.10664% |
| Insurance premium tax | 47 | 0.14741% |
| Air passenger duty | 25 | 0.07841% |
| Camelot National Lottery Fund | 54 | 0.16936% |
| Other | 10 | 0.03136% |
Assuming gross earnings over a lifetime, using the same method as used for tax millionaires (methodology outlined below) but with updated data from ONS ( http://www.statistics.gov.uk/downloads/theme_social/
Family_Spending_2004-05/TableA41.xls )
then the average earnings for a British family over its lifetime would be £1,850,685.
As a result, average indirect taxes would be as follows (worked out by taking the percentage of income spent on each tax category and calculating this as a proportion of the average lifetime income):
| Indirect tax | Proportion of expenditure (based on above table) | Amount paid in lifetime |
|---|---|---|
| VAT | 6.24137% | 115,508 |
| Duty on tobacco | 0.95973% | 17,762 |
| Duty on beer and cider | 0.37950% | 7,023 |
| Duty on wines & spirits | 0.51123% | 9,461 |
| Duty on hydrocarbon oils | 1.45528% | 26,933 |
| Vehicle excise duty | 0.42341% | 7,836 |
| Television licenses | 0.31364% | 5,804 |
| Stamp duty on house purchase | 0.53005% | 9,809 |
| Customs duties | 0.09095% | 1,683 |
| Betting taxes | 0.10664% | 1,974 |
| Insurance premium tax | 0.14741% | 2,728 |
| Air passenger duty | 0.07841% | 1,451 |
| Camelot National Lottery Fund | 0.16936% | 3,134 |
| Other | 0.03136% | 580 |
| TOTAL TAX | 211,686 |
About AXA
AXA UK is part of AXA Group. AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Western Europe , North America and the Asia/Pacific area. AXA had € 1,091 billion in assets under management as of June 30, 2006 , and reported total revenues of € 41 billion and underlying earnings of € 2,090 million for the first half of 2006.
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