Where Does All the Money Go?

Have you ever wondered what happens to the tax you hand over to HMRC? For the last three years the government has sent 30 million households a clear and simple summary of how much Income Tax and National Insurance they paid in the last financial year and how these contributions were used by the government in its spending.

The tax statements were sent to everyone who paid Income Tax and National Insurance in the 2015 financial year. According to ONS statistics in 2015/16 the government received a total of £170 billion in Income Taxes (PAYE and Self-Assessment) and £114 billion in National Insurance contributions. These taxes made up over 40% of the £680 billion total current receipts in 2015/16. Spending, known as total managed expenditure, in 2015/16 was £756 billion. The difference between these two numbers is public sector net borrowing (excluding public sector banks) – commonly known as the deficit. Indirect taxes such as VAT were not included in the summary.

The diagram below illustrates how the government spent the money it raised through tax and NI in the financial year to 5 April 2016.

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Richard J Ayre