A warning has been issued to taxpayers in the UK after new analysis revealed they will be around £3,692 worse off next year.
With bills continuing to rise amid the cost of living crisis, many people are concerned about how much their outgoings are as they try to save money - but it's bad news for taxpayers. The average taxpayer saw £3,774 deducted from their wages in tax last year and a further £2,625 in National Insurance totalling £6,399 in deductions.
The average UK salary in the financial year 2021/22 was £31,447 but this average gross income is expected to increase again in 2022/23. The jump is a result of an average annual pay increase of 3%, meaning the average person would take home £32,390 before tax, the Liverpool Echo reports.
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However, with more money comes a higher rate of tax paid and this is estimated to hit £3,962 - a 5% increase on last year. As a result, total deductions paid in tax will hit £6,588 for the current tax year (2022/23). This marks a 3% annual increase in tax paid by the average person, up 5% versus pre-pandemic levels and 10% higher than just five years ago.
Bradley Post, CEO of RIFT Tax Refunds, told the ECHO : "While wage growth has been fairly insufficient when it comes to keeping pace with the wider cost of living in recent years, the good news is that we are expected to see continued growth when it comes to the money we take home.
"Of course, the compromise of a larger pay cheque is a higher rate of tax paid and this is also set to increase over the new tax year. However, there are a raft of changes being implemented by the government in order to help households tackle the cost of living crisis, some of which are focused around tax relief in one form or another.
"It remains to be seen just who this will benefit and by how much, but it’s fair to say that for many, any help whatsoever will be warmly welcomed."
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