What is the UK’s ‘tax burden’ - and how much tax is paid on workers’ earnings?

In recent weeks we’ve seen a number of claims about the so-called ‘tax burden’ and its impact from across the political spectrum—and we’re likely to see much more debate on the topic in the run-up to next month’s Budget.

This explainer unpacks what the ‘tax burden’ is and how taxes on earnings in the UK compare both historically and internationally, as well as how things have changed, and are set to change, under Labour.

What is the ‘tax burden’?

We often see politicians and commentators discussing something they call the UK’s ‘tax burden’. This refers to the amount of tax revenue collected by the government each year as a percentage of gross domestic product (GDP).

Claims about the ‘tax burden’ often highlight how this figure compares to previous years. For example, Conservative leader Kemi Badenoch last month claimed “the tax burden is the highest it’s ever been”, and earlier this year Reform UK’s Treasury spokesperson Robert Jenrick talked of a “record tax burden”. Similar claims are often made in the media too.

While the strict accuracy of these claims may depend on what period they refer to, what is certain is that the so-called ‘tax burden’ is currently very high by historic standards. In the 2025/26 financial year tax revenues were equivalent to 35.9% of GDP—the fourth-highest figure since records began in 1948/49, and the highest since 1950/51.

Tax revenue as a proportion of GDP for the current financial year is forecast to be 37%, which would be the second highest on record, and it’s forecast to reach 37.7% in 2027/28, which would be the highest level on record.

How much tax is paid on the average worker’s earnings?

Much of the political debate in recent years has focused specifically on taxes paid by ‘working people’.

This is partly because Labour committed in its 2024 manifesto to not raise taxes on this group. We’re currently rating this promise as ‘not kept’ in our Government Tracker, on the basis that the decision to extend the freeze on income tax and National Insurance thresholds in the 2025 Budget means that from April 2028 people will pay more in these taxes than they otherwise would have done.

But the ‘tax burden’ isn’t necessarily the most useful way to assess how much ‘working people’ are taxed, because it looks at all tax revenue collected by the government, including taxes paid by both people (like income tax and VAT) and businesses (like corporation tax and business rates).

As experts have pointed out, although it’s true that the overall amount of tax being collected by the government is at a historically high level, this isn’t the case when looking specifically at taxes on earnings.

The Resolution Foundation says: “The overall effective tax rate for the median employee in 2025 was still lower than before the financial crisis, despite rising in recent years—including the impact of the increases in employer NICs.”

It adds that effective tax rates for higher earners “are somewhat higher than they were in the 2000s or 2010s, but still below levels seen historically”.

Similarly, tax lawyer and commentator Dan Neidle wrote in June 2026: “The UK now raises a relatively large amount of tax while imposing a relatively low tax burden on ordinary wages.”

One way in which taxes on ‘working people’ can be measured is the “tax wedge”, which the Organisation for Economic Co-operation and Development (OECD) defines as: “a measure of the difference between labour costs to the employer and the corresponding net take-home pay of the employee”. This also takes into account any benefits received by an employee..

In 2024 the tax wedge for an average worker in the UK was 29.93% (including income tax, employee NICs and employer NICs)—the lowest figure since OECD’s comparable records began in 2000.

Because of decisions taken in the 2024 Budget, however, including the increase in employer NICs and the impact of continued fiscal drag due to frozen personal tax thresholds, in 2025 the tax wedge increased to 32.38%.

How does the UK compare internationally?

The latest figures published by the OECD compare tax revenues of various countries in 2024. They show that in this year the UK’s tax revenues as a percentage of GDP sat just slightly above the OECD average, but were the second lowest of the six G7 countries for which figures are available.

The ‘tax wedge’ for an average UK worker in 2025 meanwhile was lower than the OECD average, and the third lowest in the G7. In 2024, the UK’s tax wedge was the lowest in the G7—however, according to the Resolution Foundation decisions taken by former Chancellor Rachel Reeves in that year’s Autumn Budget meant the UK saw “the biggest rise in the tax wedge across the OECD” between 2024 and 2025.

The Resolution Foundation has noted that the OECD’s measure of average wages produces “quite a high figure” compared to the median earnings of a full-time UK employee, which is worth bearing in mind when looking at these figures.

It’s also worth noting that these figures may reflect differences in social security systems between countries. On this, the International Monetary Fund says relatively lower taxation on earnings in the UK “reflects lower social security contributions in the UK compared to other countries and a greater reliance on progressive income taxes, although the distinction between these two types of labor income taxation is less clear-cut in the UK where national insurance contributions are more loosely linked to benefit entitlements”.

What don’t these figures tell us?

We’ve looked here specifically at the difference between trends in overall tax revenue collected by the government, and taxes on average workers’ earnings. But of course, taxes on earnings are not the only taxes paid by workers—they also pay things like VAT and council tax. It’s also worth noting that many higher earners have seen the amount of tax they pay increase more than workers on average salaries.

A report co-published by the Resolution Foundation and the think tank UK in a Changing Europe in September 2026 said that the “key motivation” of taxation decisions taken by the Labour government “has not been tax reform, but a desire to avoid breaking Labour’s manifesto commitment not to raise the main rates of Income Tax, National Insurance or VAT”—meaning taxes have instead been raised elsewhere.

And finally, while taxes on average earnings may be low by historical and international standards, the Labour government has made changes to taxes on earnings that mean in the coming years ‘working people’ (as well as pensioners) can expect to pay more tax than they otherwise would have done, due to ongoing freezes to personal tax thresholds. We wrote more about this following last year’s Budget.