I may have exaggerated on the on jubilation but it is time for a “pocket-sized” celebration this week as 29th May marked Tax Freedom Day 2018!
Every year the Adam Smith Institute calculates the number of days the ‘average’ person would have to work just to pay off their taxes.
And this year, every penny the average person earned up until May 28th went straight to HMRC and therefore from May 29th onwards, the average personal will get to pocket every penny they earn.
Therefore, this year we worked 148 days just to pay our tax bill!!
I do love anything that helps people understand the size of their overall tax burden, however, I do need to point out here that obviously there is no average person. Because we don’t have a proportional tax system, every individual will have a different Tax Freedom Day but I do think it’s a good reference.
In theory, Tax Freedom Day will come later for high-earners and earlier for low-earners and the unemployed. In practice, this isn’t necessarily true because the HMRC does not simply tax income but also taxes consumption, investment and ‘sin’ activities at different rates.
The research also takes in other factors, which you can see here on their website if you want to see further details. It also shows graphs on the trends since 1995 when they began this study.
But even for those of you who don’t want to check it out – whether you decide this date is too high, too low or spot on then it’s worth that diminutive celebration that you are now keeping whatever you earn for the rest of this year … so make it count!!