It is well known that taxes relative to GDP have risen to 34%, their highest level for 70 years, and are going higher. But what the trend has meant for ordinary taxpayers is often overlooked. Forty years broadly spans a typical working lifetime, so how have personal taxes changed since the early 1980s?
The first Budget after the election of Margaret Thatcher’s government in 1979 reduced the standard rate of income tax, which had been 35% two years earlier, from 33% to 30%. Nine higher-rate bands were reduced to five while the top rate, on income over £25,000 per annum, was cut from 83% to 60%. This was financed by a near-doubling in the rate of VAT from 8% to 15%.
The standard rate of income tax was cut to 29% in 1986, 27% in 1987 and 25% in 1988, when the top rate, on income over £19,300, was lowered to 40%. The standard rate reached 23% in 1997 and the current 20% in
