Lifetime tax bill for average family ‘reaches £650,000’

The startling sum, which is based on an average annual household income of £36,372, has been revealed ahead of tomorrow’s tax self-assessment deadline.

The latest figures, which are broken down by income, are based on the amount of direct and indirect tax currently paid by families over their working lifetime, as well as during retirement.

They show an average household in the highest income bracket, which is based on annual average earnings of £79,888, will fork out over £1.3m in taxes, while those in the lowest, with an average annual income of £11,730, will pay £235,000.

And the taxes which hit people hardest have been revealed as income tax, VAT, employee National Insurance contributions and council tax.

Calling for taxes to be slashed in this year’s Budget, the director of the TaxPayers’ Alliance, Matthew Sinclair, said: “Households in the UK now pay an incredible amount in tax over a lifetime, handing over a hefty slice of their income.

“The VAT hike has added to the cost of living and many taxpayers are really feeling the pinch with little prospect of improvement on the horizon.

“The Chancellor needs to deliver a tax cut in the Budget to ease the burden and help the economy to grow.

“Simpler, fairer taxes can decrease the lifetime tax bill for households and leave everyone with more of their own money, so they can decide how to spend it.”

The Government announced on Thursday that UK taxpayers, who are rushing to fill in their self-assessment tax forms as tomorrow’s deadline looms, could be given a two-day lifeline because of strikes by tax office staff.

HM Revenue and Customs (HMRC) said it would not be issuing penalties to anyone who files their tax return on February 1 or 2. Equally, those who have tax to pay will not face any interest on payments made on these dates.

HMRC’s acting director general of personal tax, Stephen Banyard, said: “We’ve always been very clear that we want the returns –not the penalties. For that reason, we don’t want anyone who can’t get through for help and advice on January 31 to be disadvantaged in any way.”

Meanwhile, Chancellor George Osborne is resisting pressure to speed up tax cuts for hard-pressed families. In a speech last week Deputy Prime Minister Nick Clegg called for the Chancellor to move further towards the promised threshold of personal tax-free allowance in this year’s Budget as further cracks started to appear in the coalition Government.

The coalition has already raised the level at which income tax becomes payable to £7,475 and it is set to rise again in April to £8,105. The Treasury has said it will further increase to £10,000 by 2015 but Mr Clegg wants to reach that target earlier.

The Yorkshire Post revealed on Thursday that a terminally-ill campaigner who is being prosecuted for failing to pay council tax claimed her situation was so desperate that she feared losing her home. Debbie Purdy, a multiple sclerosis sufferer from Bradford, said she had been forced to choose between paying her council tax or buying food.