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Online tax and Government spending calculator launched

A new online tax calculator enabling individuals to work out how much tax they pay, and how the Government spends it, has been launched by HMRC.

The service forms part of the Government's drive to make the tax system 'more transparent, open, and easier to understand', after comissioned research found that over half of tax payers (57 per cent) are unaware of how much income tax and national insurance contributions they pay within a year.

The research, which questioned over 2,000 people, found that individuals in the UK were much more engaged with their day-to-day financial affairs than their tax affairs.

70 per cent said that they always check their transactions when viewing bank statements, while 26 per cent check to see how much tax they have paid. Only 10 per cent said they could be sure of the exact amount they had paid to the tax man.

Exchequer secretary to the Treasury, David Gauke, said: "We think it is right that people know how much tax they pay and what the Government spends it on."

"At the moment, over half of taxpayers do not know how much income tax and National Insurance they pay in a year. Our new tax calculator will allow them to find out, which is a big step towards a more transparent, 21st century system."

20m taxpayers will also receive personal tax statements showing how much tax they have paid and what it was spent on from 2014/15, after the Government made announcements in this year's Budget.

The free online calculator and mobile app follows a consultation launched in November last year which sought ways to modernise the administration of the personal tax system. It is aimed at those who pay tax via the Pay As You Earn System (PAYE), providing they:

  • Are below the state pension age
  • Get the basic tax-free personal allowance
  • Receive employment income only. i.e. not from savings
  • Pay class 1 National insurance contributions,
  • Earn less than £100,000.

Users who enter their gross salary details will have their income tax calculated, as well as national insurance contributions, total tax paid and where the Government has spent this money. It does not include indirect taxes such as VAT or capital gains tax.

The calculator is available via HMRC's website or it can be downloaded as a free mobile phone app.