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Contractor accountants won’t be free from tax until May 30th

Contractor accountants won’t be free from tax until May 30th

Contractor accountants may be interested to know that Britons will not start earning for themselves until May 30th this year, due to the VAT increase which comes into force today, January 4th.

The Adam Smith Institute has said that all monies earned between the 1st of January and the 29th May 2011 will belong to the taxman. On May 30th, Britons then begin working for themselves; a date coined Tax Freedom Day by the Institute.

This year, Tax Freedom Day is three days later than it was in 2010 and this is largely attributed to the increase in VAT from 17.5% to 20%.

The executive director of the Institute, Tom Clougherty, said the impact of the VAT rise will affect every household in the UK, denting consumer confidence and putting a dampener of the country’s economic recovery.

The coalition is correct to prioritise spending cuts and repairing the budget deficit but people in the UK remain seriously overtaxed. We spend nearly five months working solely to support the state and only seven supporting our families, which is a shocking indictment of a large and wasteful government, he added.

The OECD revealed last month that the tax burden in Britain is higher than in many of its peer countries, having increased since 1995. Taxes exceeded 34.8% of the OECD GDP in 2008, even though they have fallen in recent years.

Canada, Ireland, New Zealand and the U.S. have all reduced their tax burden in the last fifteen years and even countries like Denmark and Sweden, which levy high taxes, have reduced them. But the burden of taxation in the UK has risen by about 1.5%.

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Image: Please Pay Here 3-14-09 19 by stevendepolo

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