What Does the Average Brit Pay into and Take Out of the Welfare State?

The average British family paid about £25,000 in taxes in 2016 – up from £15,000 in 2015. Over a lifetime, that works out to be roughly £823,439 per household. Income tax tends to make up a good chunk of this – it accounted for £175.9 billion of Treasury receipts in 2016 followed by VAT and national insurance payments. Taxes on alcohol and tobacco, property tax, car tax, lottery tax, and airplane dues also figure into that total amount.

Research suggests that the figure of £25,000 per household is a hefty fee. The Institute for Fiscal Studies calculated that the average British household pays more in taxes today that it has at any point in the last 30 years. Tax revenues are projected to hit 37 percent of national income in the 2019/2020 tax year – the highest level since 1986/1987 during the reign of Margaret Thatcher.

So, what does the British government do with all that revenue? While the British government will spend roughly £252 billion on social protections next year, including tax credits, housing benefits, and disability benefits. This number has systematically been slashed over the past five years, with many arguing that the government is dismantling key benefits for society’s most vulnerable, but it still works out to about one-third of government spending. In addition, the government will also spend £155 billion on the National Health Service – the UK’s free medical system to which all Brits are entitled – and another £35 billion in transport and £102 billion in education.

While these figures are generous, the UK actually lags behind many of its European peers in welfare spending. The country spends 12 percent less than France does on welfare spending and 19 percent less than Germany.

How does all of this benefit the average Brit? Well, the majority of Brits actually benefit from the government’s spending. In 2013, it was estimated that roughly 20.3 million families in the United Kingdom received some kind of welfare benefit. That works out to about two-thirds of all families. Of that 20.3 million, about one-third are retirees living off of a government pension. For half of the 20.3 million – or 30 percent of all families in the UK – benefits make up more than half of their income.

And perhaps most importantly, research conducted in 2015 actually suggested that half of all households in the UK received more in benefits than they paid out to the government in taxes. According to statistics released by the Office for National Statistics in 2013, the poorest fifth of households received £14,868 worth of benefits from the government while paying out around £4,886 in tax.

The bottom line? The British Welfare state is certainly expensive, but it does have positive effects for many Brits.