British workers have to until July 15 this year just to pay off interest on their unsecured loan and credit card finance plus taxes.
That means they spend more than half the year working for the benefit of someone else –
and that’s before taking in to account repaying a mortgage and repaying the money they have
borrowed.
Reaching the break even point takes 196 days – and the date is three days later for taxes this
year due to the increase in VAT from 17.5% 20% on January 4.
The timescale is split between taxes and debts – with ‘tax freedom day’ coming on May 31 and
debt freedom arriving 45 days late on July 15.
The figures are calculated by dividing average interest and tax payments by average daily
earnings.
Borrowers should take the time to look at their credit repayments and see if they can save
money by switching to a different provider.
Online money comparison sites can help by highlighting the best deals.
The last time tax bills made up such a large proportion of wages was 2007, when tax freedom
day was not reached until June.
Tom Clougherty, executive director of the Adam Smith Institute, that calculated tax freedom
day, said Britons were “desperately” overtaxed.
“The fact that we spend almost five months working for the state and only seven months
working for ourselves and our families is a shocking indictment of big, wasteful government.
“As well as hitting every household in the country, the VAT hike is going to dent consumer
confidence and put a dampener on our economic recovery.”
Debt freedom day was calculated by online financial advice site unbiased.co.uk.
“Rather than worrying about it and letting their personal finances spiral out of control, people
should instead pro-actively manage their finances,” said the site’s chief executive Karen
Barrett.
“With debt levels still remaining at extreme highs there is no better time for people to service
their debt and get back in control of their finances.”
