Seems these days the tax man wants to get his hands on every penny we earn, spend or save. He wants it all….yes all!
The first point of attack is the income tax.
The Govt. generously grants the workers of the UK a threshold of £8, 105 per year. So, basically they will allow you to earn £156 a week before they start dipping their grubby little fingers into your pocket.
After that the basic tax 20% tax rate kicks in, allowing you to earn up to £34,370.
Should you earn between £34, 371 and £150,000, you have earned the right for them to take 40% of your income.
Become financially compensated over £150,000 for all your years of hard work and dedication and the tax man will go ahead and take a whopping 50% of your annual income over that 150k…BEFORE you’ve even had a sniff at it. That mean from the 1st Jan to 30th June….almost every cent you earn goes to the tax man!
I’m going to stick with the top tax bracket for this example….and I’ll explain why a bit later.
So. You did as you were told. You studied hard at high school and got a place at University just like mum wanted right. You got your degree, maybe you hung around for another year or two and managed to pull off a Masters or PhD. Anyhow, you then had to embark on a 10, 15 or 20 year grind….working for “the man”.
In that time you also fell in love and decided to get married…..(let’s not even talk about how much that costs).
Then came along the average 2.2 kids…with their school fees, clothes and braces.
Now….remember you only have the money you earn from the 1st of July until the 31st of December left.
Out of that you have to pay rent, in London, that’s gonna cost you. Let’s say you live in a modest 2 bedroom flat in a decent part of London, nothing fancy. This is going to set you back at least £2,000 a month on the 1st of every month. That’s £24,000 a year! Whilst you are paying that rent you will also have to try to save a deposit for a house too! There is no government housing out there for “high income earners”. So let’s save £500 a month for the house deposit. That’s £6,000 a year you can’t touch…OK!
You are going to need to eat…..nothing too fancy, let’s say you are a whizz in the kitchen and can make something out of nothing much….you could probably get by on £100 a week for 4. You are eating a lot of rice and mince meat ok…but you are willing to do that for the greater good. That’s £5,200 a year!
You will need a phone, gas, electricity and water. Let’s allow another £200 a month to cover those bits and bobs. That’s £2,400 a year!
Remember the school fees we talked about before. Average private school fees in the UK are £13,800….you have 2 kids remember with another on the way maybe at some point (can you really afford it?). So, to educate the 2 bundles of love you do have, that’ll set you back £27,600 a year!
Sure you could send them to the local government school if you had to pull back on some spending, but for now we will assume you want to try and give them the best possible start education wise.
The kids haven’t finished stripping you of finances yet. There’s drama class or ballet, football or pony club. There are swimming lessons and maths tutors to pay for. Let’s dip in for £100 a week to cover those bits and bobs. I hear you now….“one can’t get all that for £100 a week”. I’m asking you to suspend disbelief for a second and just roll with me here. So there’s another £5,200 a year.
Of course there is car insurance and home contents insurance to pay for. The UK average is £1000 for the car and let’s put away £300 a year to cover the couch and that massive CD collection in case the joint burns down.
Then there’s the brick-a-brack costs to living. Petrol for the car, servicing, road tax, you’ll need an Oyster card too, there’s the occasional pizza or Indian take away, maybe you buy a magazine or have a beer at the pub on Friday night. You might like to go to the cinema once or twice a year and catch a flick, there’s birthday presents to buy, the annual vet check up for the dog, Oh, might as well throw in some pet insurance too while we are at it. How about we allow say, £100 a week for all that. LOL. I hear ya….work with me here people! There’s £5,200 a year!
I’m naked…I need clothes! You shall have to ration this out. There’s you, the other half and those 2.2 kids remember. 1st up the kids will need the full kit school uniform. £500 each and there’s a sweet grand. You are not label people and get by on M&S, Top Shop and a few other High Street faves. Let’s throw £500 a month aside to cover the cost of the basics for 4 people. Anything extra will have to be worked out later. So there’s £6,000 a year plus the school kit….so make that £7,000 to retain the modesty of the family.
I hear the family screaming for a holiday this summer….so you find a deal online where all four of you can head to some crappy all-inclusive resort for a week in the sun. This is going to set you back another £2,000.
Let’s start adding this up shall we: holiday 2,000 + 7,000 for clothes = 9,000 + 5,200 for brick-a-brack = 14,200 + 1,300 for some insurance= 15,500+5,200 for the kids extras = 20,700+27,600 for those pesky school fees = 48,300+ 5,200 for food= 53,500+2,400 for utilities = 55,900 + the 6,000 savings for a home deposit = 61,900 + rent of 24,000 = 85,000.
That’s £85,000 a year to keep a family of four on the basics.
You earned £150,000 no sweat….150,000-85,000 = 65,000 left over right. NOPE…..remember the tax man?
Out of the 150,000 you earned the tax man already took £75,541 in taxes, National Insurance and that Student Loan for that Uni degree!
So you were left with £78, 458….but the cost to keep your family alive is £85,000. We are in the red, to the tune of £6,542!
Something is going to have to give. Pull the kids out of private school? Stop saving for a home deposit? No holiday? Cut back on eating?Charity shop clothes? What is the answer?
One thing that is for sure….the Tax Man is ALWAYS going to get his grubby mitts on your money FIRST! You then have to decide how whatever is left over is best spent.
Just remember….if you forego any luxuries whatsoever and manage to figure it out so you actually save a few bob at the end of the year, the tax man is going to come knocking again for a slice of any interest you have earned on those savings. This is a double dip in my mind….he already taxed it at the beginning, you live frugally and manage to save some, he says he then wants another go at it.
How, as a society have we come to accept that this is OK?
You know that holiday you want…..the one you have worked all year for, saved for, gone without for…..well, he says you need to pay a myriad of taxed rolled into one convenient APD or air passenger duty. The tax man thinks it’s better to triple dip the working person than to charge the airlines a tax on aviation fuel or VAT on the purchase of aircraft.
We have become a society that has just learned to fear the tax man. The example above was just a random list of things I could think of that a family might need in order to live. There’s no scientific basis to it and the numbers I included were just rough estimates….kinda along the lines of what I think the average person on 150,000 a year would spend…..and we see that the numbers just don’t add up.
People on the lowest tax bracket get all the govt. funding they need to make ends meet. Those in the two middle brackets get tax credits, concessions, deductions and allowances to help make ends meet. I’m not saying it’s easy for them….those middle income brackets living in London would struggle to survive without the help of the govt. housing they are entitled to.
So it seems to me, no matter what you earn, you should be angry at the TAX MAN. People should be in the streets yelling and screaming. There should be a bloody revolution.
Who is holding the govt and the tax man accountable for the way they spend the money that they steal from the working person? Isn’t it supposed to be us? Aren’t WE the ones who are supposed to be in charge? Aren’t THEY public servants? Aren’t they accountable to us….haven’t WE entrusted THEM to do what is right for US?
As a housewife I have to know how to balance our budget so we can try and stay in the black….I don’t have a working population of 38 million people to tap into should I fuck up! The tax man DOES! He can fuck it all up and just say…..”Ooooop, my bad, we overspent, gonna have to levy another bullshit tax on you working schmucks to get some money back in the govt coffers”! We, the people, hear this time and time again. We bitch and moan about it….but what do we do about it?
When did the public become so complacent and just decide to sit back and allow this to happen?
Isn’t it time the working people of the UK, of the world, stood up and said enough is enough?
I think so….but would anyone stand up with me?