Tax Freedom Day – Stop paying the tax man and start paying yourself…
What’s it all about?
Tax Freedom Day is the day when average Britons stop working for the Chancellor and start working for themselves. Or put another way, for 148 days of the year every penny you earn will be taken by the government in tax! Today you can celebrate that from here on in you are paying yourself and not the taxman.
When is it, and how is it calculated?
This year tax freedom day falls on 28th May 2014.
It is calculated by comparing general government tax revenue with Net National Income (NNI). The total of all government tax revenue – direct and indirect taxes, local taxes and National Insurance contributions – is calculated as a percentage of NNI at market prices. This year it comes to 41.09%. That percentage is then converted to days of the year, starting from 1 January. The first day of the year that Britons work for themselves rather than the taxman is Tax Freedom Day… today.
Is it always the same day?
It has varied quite significantly over the past few decades. In the 1970s it tended to fall in late May, before rising to the latest date on record in 1981 (20th June). It fell throughout the 1980s to a low of 20th May in 1993 before rising again to a 24 year high of 3rd June in 2001. Tax Freedom Day over the last ten years:
|2012||28 May (29th ex. leap year)|
What’s the next interesting date?
That will be Cost of Government Day — the day the government stops spending money! In 2014 this will fall on 26th June (in 2013, it was 2nd July), assuming the government gets its forecasts right and that financial year growth of revenues, GDP and expenditure are equivalent to calendar year.
All figures are sourced from the Office of National Statistics.