UK's tax burden highest on record despite recent national insurance cut

The UK's tax burden is at the highest rate since the Second World War. Credit: PA

New data has revealed that the UK's current tax level burden is the highest rate on record, according to the OECD.

The news comes as separate figures showed the UK also now faces the highest level of property taxes across the developed world.

Annual revenues statistics from the OECD (Organisation for Economic Co-operation and Development) found the total tax-to-GDP ratio across the UK hit 35.3% for the 2022/23 financial year - the highest since OECD records began in 2000.

The data represents a 0.9% increase from the 34.3% record a year earlier.

The tax burden is forecast to keep on rising. Credit: PA

Consequently, for every £1 generated in the UK, the government collects 35.3p of it as tax.

The figure is projected to keep on increasing to 37.7% by 2029, despite a recent 2% cut in national insurance.

A government freeze on tax rate thresholds is mostly to blame, despite the growth in inflation and wages.

As a result, far more people are being tipped into higher tax bands than they should have been if they were growing at pace with inflation.

The OECD's data shows the UK has the 16th highest tax rate of the 38 OECD member countries and is above the group's average of 34%.

Separately, new analysis from commercial real estate firm Altus Group revealed the UK has the joint-highest rate of property taxes among OECD members.

The UK was found to have a ratio equivalent of 4% of property taxes to GDP.

According to the research, this compares with an average of 1.5% across the European Union (EU) and a 2.9% average against countries in the G7 group of advanced economies.

In the UK, property taxes include all tax receipts from council tax, business rates, SDLT (stamp duty land tax) and LBTT (land and building transaction tax) in Scotland.

The Office for Budget Responsibility (OBR) has also forecast a further hike in UK property taxes, with business rates set to increase by £3.2 billion from April 1 because of an inflation-linked rise, while council tax receipts are set to grow by £2.3 billion.

Labour seized on the OECD data to argue it was the consequence of 13 years of "Conservative economic failure".

Shadow financial secretary to the Treasury James Murray said: "Working people and businesses are being made to pay the price for their failure on the economy - with 25 Tory tax rises in this Parliament alone."

A Treasury spokesperson said: "The UK tax system is highly competitive, with the lowest headline rate of corporation tax and the most generous capital allowances in the OECD, while our tax to GDP remains in the middle of the pack in the G7 in 2028-29 – lower than France, Italy and Germany.

"Our autumn statement delivers a £10 billion per year tax cut for businesses by making full expensing permanent, and an over £9 billion per year tax cut for employees and the self-employed, worth over £450 for the average worker on £35,400."

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