Where does our tax get spent?

Image courtesy of Wikimedia Commons

A lot of taxpayers view the money they’ve paid to HMRC as income lost, without of course remembering that the government reinvests this cash into our public services.

As part of the annual budget, documents are released declaring the official intention of the treasury for the years going forward. This provides the public with the opportunity to investigate where their earned income has been used.


Expenditure in 2018/19

For 2018/19, the spending is expected to be around £808bn, separated as follows:


Tax expenditure on Social Protection

The most interesting aspect is how such a sizeable proportion (£252bn, 31%) of the budget is dedicated to Social Protection, also known as the welfare budget, which includes State Pension, Disability and Housing Benefits among others.

This is an area that likely will continue to require high investment in the years to come, particularly due to the ageing UK population.


Tax expenditure on Healthcare

Another large piece of the treasury is invested in Healthcare (155bn, 18%), another area that is likely to increase in cost in the near future.

The National Health Service is often compared alongside the US system of health insurance in terms of cost to the individual, the NHS is free at the point of contact as opposed to thousands of dollars a year in the US.

However with such a large proportion of the UK government’s budget dedicated to health – many people (in particular higher rate taxpayers) will have £100s or £1000s of their tax spent on healthcare, matching more closely with our US counterparts.


Tax expenditure on Defence

Other expected departmental expenses are Defence (£49bn, 6%), Transport (£35bn, 4%) and Public Order & Safety (£35bn, 4%), which includes the police and fire services.

A particularly concerning value is the Interest (£41bn, 5%) on debt that previous governments have accumulated. This is what has led these governments to make cost cutting decisions in order to ‘reduce the deficit’, hopefully to free up these funds in the future for public services

Sources – Government Spending & Revenue; 22nd Nov 2017

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