Tax Freedom Day: After 149 days of work

tax freedom day

tax freedom dayTax Freedom Day has arrived two days later than last year, according to the Adam Smith Institute, which could have a small impact on the finances of families across Britain.

Tax Freedom Day, as the name suggests, is a day to celebrate for hard-working parents up and down the country, as the unofficial date in the calendar when UK taxpayers, like you and I, effectively stop earning to pay our tax obligations and instead start earning for ourselves.

The institute's director, Dr Eamonn Butler, says it is "the plainest way to show what the tax burden really is".

He said: "That is why the Treasury hates it. They of course want to conceal how much tax we pay, which is why they are so keen on stealth taxes."

The late arrival this year means that Brits will spend two extra days working to pay their taxes in 2012, compared with the year before.

The reason for the 48-hour delay has been attributed to the double-dip recession and increased VAT which has heaped pressure on families in Britain. Parents have had to significantly cut back on spending, sometimes on necessities, in order to make sure they have enough to get by.

And it now seems working families will lose yet more money.

Tax burden

Dr Butler added: "The stark truth is that this burden costs us all 149 days of hard labour every year. That's not how long a rich person has to work - it is the time the average person must labour for the tax collectors."

The Adam Smith Institute includes levies such as Vat, income tax, national insurance, council tax, excise duties, air passenger taxes, fuel and vehicle taxes in its calculations.

How much tax should you be paying?

When it comes to paying your tax you have a base rate of £8,105, which is your personal allowance.

This means that you do not have to pay any tax on the first £8,105 of your earnings. However, you are then required to pay tax on any money which you earn after this base allowance.

Along with the other budgeting tools necessary for any foolproof budget plan, it is important for families to figure out exactly how much they should be paying each year.

If you are paying too much, you will be able to reclaim the excess that you have paid through a rebate at the end of the tax year in April.