Taxpayers worked 169 days for HMRC this year. The 18th of June is the first day they start working for themselves.

  • Tax Freedom Day falls on the 18th June.

  • Brits work 169 days of the year solely to pay taxes.

  • UK Taxpayers will fork out over £901.8bn to the Treasury this year, 46.25% of net national income.

  • This is the latest Tax Freedom Day since reliable records began in 1995—and compared to earlier (less reliable) data it is the latest since the mid-80s. 

  • Cost of Government Day, which factors in borrowing as well taxes, is August 15th—the latest on record, even factoring in pandemic spending in 2020.

  • MPs have provided comments in support of Tax Freedom Day, recognising the need to reduce the burden on people and businesses during a cost of living crisis. It is now incumbent on the Government to lower taxes to boost growth and investment. What is Tax Freedom Day?

Tax Freedom Day is the day when Britons stop paying tax and start putting their earnings into their own pocket. In 2023, the Adam Smith Institute (ASI) has estimated that every penny the average person earned for working up to and including 17th June went to the taxman - from June 18th onwards they are finally earning for themselves. 

British taxpayers have worked a gruelling 169 days for the taxman before they can start earning for themselves.

Brits’ tax burden is moving in the wrong direction. Last year, Tax Freedom Day fell an entire week earlier. In the midst of a cost of living crisis, taxpayers are being burdened with even more obligations to HMRC. While the Government’s immediate interventions to help households through the crisis are welcome, the rising cost of living cannot be effectively tackled without a growing economy underpinned by low taxes. 

With current trends, we can expect Tax Freedom Day to continue to fall later in the year. Using OBR growth and tax revenue projections from March 2023, Tax Freedom Day is projected to hit June 23rd in 2025: the latest since at least the early 1960s, according to historical data.

Dr Eamonn Butler, Founder and Director of the Adam Smith Institute said:

“With taxes at a post-war high, and living standards at a post-war low, this supposedly Conservative government is continuing to fleece hard working families and innovative companies to fuel the rolling catastrophe that is public service provision.

The government must be making concerted efforts to cut-taxes for every economic participant, which will drive growth and combat the cost of living crisis for the poorest in our society.”

The Rt Hon Lord Frost said:

"Tax Freedom Day comes later and later each year. It's a huge 10 days later this time, showing how much the government has raised taxes in a short period. The state has lost control of spending and as a result working people pay ever more for an increasingly inefficient government.  We need to change direction and do so urgently."

Rt Hon Sir Jacob Rees-Mogg, member of parliament for North East Somerset said:

“Tax freedom day falling on the anniversary of the Battle of Waterloo is a reminder that each age has its own battles to fight. 

“Ours is against excessive, unnecessary, expensive government.” 

Matthew Lesh, director of public policy and communications at the Institute of Economics Affairs said:

“Tax Freedom Day is horrifyingly late this year, with the state gobbling up almost half of our national income. It’s a stark reminder that British taxpayers are paying more and getting less. Millions are stuck on NHS waiting lists, infrastructure projects are repeatedly delayed and over budget, and an ever-growing bureaucracy stifles innovation.

Britain faces a death spiral of high taxes and low growth. We need tax cuts that let people keep more of their hard-earned money and to cut red tape to enable investment and prosperity.”

John O’Connell, chief executive of the TaxPayers’ Alliance said:

"Families and businesses struggling to pay the bills will be furious to know that they spend almost half the year working for the taxman. What's more, the screws will be turned further in the coming years as the government shifts ordinary workers into tax bands designed for the super rich.

The only way to lighten the load on taxpayers is to reform public services and get spending under control."



Notes on Tax Freedom Day and methodology:

What is Tax Freedom Day?

Every year, the Adam Smith Institute calculates the number of days the ‘average’ person (more on that later) would have to work off to pay their taxes. This year, every penny the average person earned until June 17th went straight to the taxman. From June 18th (Tax Freedom Day) onwards the average person will get to keep every penny they earn. 

We calculate Tax Freedom Day each year to illustrate the true size of the tax burden once you factor in taxes from every source. 


Complications

While Tax Freedom Day is a simple idea in principle, in reality it’s a little bit more complicated. First, there’s no average person. Because we don’t have a proportional tax system, every individual will have a different tax freedom day. In theory, Tax Freedom Day will come later for high-earners and earlier for low-earners and the unemployed. In practice, this isn’t necessarily true because HMRC does not simply tax income, but also taxes consumption, investment and ‘sin’ activities at different rates.

Second, we measure the total tax take. This includes indirect taxes (such as VAT and Corporation Tax) as well as direct taxes (Income Tax and National Insurance). Economists distinguish between legal and economic incidences (a fancy economist word for ‘burden.’) The legal incidence of Corporation Tax may fall on individual firms, but corporations are artificial legal constructs. In reality, Corporation Tax is paid by people, the debate between economists is to what extent it falls between consumers, shareholders and workers. (Our paper Corporation Tax: Who Pays had a crack at the answer.)

Thirdly, we take into account depreciation and foreign investment earnings, as is standard around the world, measuring total taxes over net national income, not gross domestic product, so as to more closely approximate net wealth creation rather than economic activity. 

Fourth, tax receipts and net national income statistics are regularly revised by the Office of National Statistics and we revise past Tax Freedom Days along with them. Four years ago, the ONS made massive revisions to the net national income series. Irritatingly, as a result more reliable records now only go back to 1995.


Projections

The data for the most recent figures are not available up-to-date for calendar years so they are proxied from government and OBR forecasts and financial year numbers. They are then revised when exact numbers become available. This means the Tax Freedom Day for a given year in the past may well have changed. Typically the changes are very small, and the overall picture tends to be robust to these alterations. But over the past year, significant revisions to the net national income stats have pushed Tax Freedom Day back by around a week (we’re freer than we thought).

Tax Freedom Day (and its sister, Cost of Government day, which measures total spending over national income) is not meant as anything but an illustration—an indication of the size of the state. As the complexities details above suggest, it does not correspond exactly to any individual’s experience. And yet many people do find it shocking to see how large the state really is, expressed in an intuitive way.


If you want further info on methodology, feel free to call up the ASI on 02072 224995 or send our Director of Research, Maxwell Marlow, an email at Maxwell@adamsmith.org.