How much tax do we pay in the UK compared to other countries?

Chancellor of the Exchequer Jeremy Hunt delivering his autumn statement to MPs in the House of Commons, London. Picture date: Thursday November 17, 2022.
Chancellor Jeremy Hunt delivering his autumn statement to MPs in the House of Commons. (PA)

Millions of Britons will be paying more tax after Jeremy Hunt's controversial autumn statement earlier this month.

The chancellor announced £25bn of rises that have increased the UK's tax burden to its highest level since the Second World War.

He announced that a freeze on personal tax thresholds would be extended until 2028, dragging millions of people into higher tax bands as their wages increase over time.

Is the UK a high tax country? Yahoo News UK explains in nine points

Chancellor of the Exchequer Jeremy Hunt gives a television interview the morning after his autumn statement, outside the BBC studios in central London. Picture date: Friday November 18, 2022.
Millions of people will pay more tax under chancellor Jeremy Hunt's plans. (PA)

What did Jeremy Hunt announce in his autumn statement? The chancellor said tax thresholds will be frozen until April 2028, meaning millions of people will pay more. The basic rate of tax will remain at £12,570, while more earners will be dragged into the higher 40% rate, which starts at £50,271 a year. The additional rate of income tax, 45%, will drop to £125,140 in April 2023.

How do UK taxes compare to previous years? The Office for Budget Responsibility said that taxes as a share of the economy will peak at 37.5%, the highest level since the end of the Second World War. The government spending watchdog said the UK is already in a recession which will last more than a year and push 500,000 people out of work.

Are higher taxes here to stay? Paul Johnson, director of the Institute for Fiscal Studies (IFS), said in the wake of Hunt's announcement that "higher taxes are the new normal". He warned that taxes as a share of the economy – or a percentage of national income – will not return to 33% for another 30 years.

The tax rate in the UK is below average for a developed country (Yahoo News UK/Flourish)
The tax rate in the UK is below average for a developed country (Yahoo News UK/Flourish)

How do the UK's taxes compare with the rest of the world? The Organisation for Economic Co-operation and Development (OECD) compared the total tax revenue as a percentage of gross domestic product (GDP) among its 38 member nations for 2020, the most recent year which has internationally comparable data. Then, the UK's tax rate was at 33%, just below the OECD average of 34%.

Which countries pay the most taxes? According to the OECD, Denmark has the highest tax revenue as a proportion of its GDP, on 47%, followed by France with 45% and Belgium on 43%. Countries outside Europe tend to have a lower tax burden, with New Zealand on 32%, Japan on 31% and Australia on 28%.

(PwC/Yahoo)
(PwC/Yahoo)

How much are the highest earners taxed in the UK compared to other countries? According to data from PricewaterhouseCoopers, income tax rates for the highest earners are relatively low in the UK compared to other European OECD nations. Again, Denmark has the highest personal income tax rate, at 56%, compared to 45% in the UK.

Middle earners will be hit by the tax rises too. According to the Resolution Foundation think thank, Hunt's policies will squeeze those on middle incomes as well as the richest. This is mainly down to the government's focus on "stealth taxes" – freezing tax thresholds while inflation is soaring.

File photo dated 03/10/22 of Jacob Rees-Mogg during the Conservative Party annual conference at the International Convention Centre in Birmingham. The Bank of England's failure to raise interest rates in line with the US is driving turbulence in financial markets rather than Kwasi Kwarteng's mini-budget, Business Secretary Jacob Rees-Mogg has said. Issue date: Wednesday October 12, 2022.
Tory MP Jacob Rees-Mogg has criticised chancellor Jeremy Hunt's tax rises. (PA)

Jacob Rees-Mogg accused Hunt of taking the "easy option" by putting up taxes. He told Channel 4 News: "Taxation has got too high and there are issues with the level of expenditure that we have got. I think there is a real problem with fiscal drag bringing more and more people into the 40p band who, particularly if they are living in the south of England, are not necessarily particularly well-off."

The chancellor defended his tax increases, telling Sky News: "None of this is easy, but it's the right thing to do. What I would say to my Conservative colleagues, is there is nothing Conservative about spending money that you haven’t got. There is nothing Conservative about not tackling inflation, there is nothing Conservative about ducking difficult decisions that put the economy on track.