How much of your salary goes on tax?

published 1 June 2012

If your tax is deducted from your salary at source via PAYE, do you really know how much of it you pay? Most people (57% according to HMRC) don't. So I'm pleased to see that in advance of the government's plan to send out individual tax statements to us all from 2013, HMRC has introduced a new online calculator to help us all see where our money goes.

All you have to do is visit www.hmrc.gov.uk and pop your annual salary let's say it is £60,000 into the right box and next thing you know you'll be hyperventilating. In this case you will find that you pay a total in income tax (including national insurance, or NI) of £353.87 a week, or £18,401.24 a year. You can then check the detailed breakdown to find out "how the government spends your taxes".

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If that isn't bad enough, he pays £1,177 in interest on our national debt. You'll be upset by now. But if you stop to visit the website and run your eye to the bottom of the page, you'll see that your £18,401 is just the beginning. Income tax in the form of what we think of as income tax and NI makes up a mere 43% of government revenues. The rest comes from VAT (17%), council tax (4.5%), business rates (4.5%), corporation tax (8%), excise duties (8%) and a mysterious sounding "other" (14%).

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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.