Britain is at peak taxation with households being squeezed at the highest rate since 1945.

Workers and pensioners alike have been battered by rounds of tax hikes year after year from successive governments.

The International Monetary Fund’s assessment last month found that tax rates on our wages have increased at the fastest pace in the developed world under this Labour government, concluding ‘the long term scope for further revenue increases is becoming limited’.

In other words, families are already handing over as much as they can bear.

As Labour now threatens yet another round of swingeing tax hikes this autumn, Money Mail can, for the first time, lay bare exactly how much more households are paying in tax compared to previous decades.

With the help of think-tank Tax Policy Associates, we’ve put our nation’s personal taxes under the microscope – and uncovered just how many different types of taxes Rachel Reeves is using to pick our pockets today.

So how does your tax burden compare to what you would have paid five years ago, 20 years ago in 2006 and 40 years ago in 1986. 

Read to find out – and learn expert tricks to claw earnings back from the Chancellor.

Pain for pensioners

From pensioners to first-time buyers, small business owners to families, our analysis shows millions of households across Britain pay thousands of pounds more in personal taxes now than previously.

Frozen tax allowances since 2021 have been a key driver of this financial pain, resulting in larger income tax bills for workers and those who are retired and live on a pension.

We’ve analysed six common types of household to see how much they pay in taxes today compared to in the past. 

This includes a family of four with two earners on the average wage, a family with one high earner, a household with a top earner who gets a large bonus, a first-time buyer, a single pensioner who has sold a buy-to-let property and a pensioner couple on a modest income (see graphic below).

People in the UK typically pay a dozen core taxes, such as income tax, National Insurance contributions, Value Added Tax on goods and services, fuel duty, vehicle excise duty on their car, council tax and a TV licence.

Pensioners are among those who have been hit the hardest since 2021. A retired couple taking an income of £25,000 and £20,000 a year and who own their home outright, pay an extra £996 in taxes than they did five years ago, according to analysts at Tax Policy Associates.

This is largely down to a 53 per cent increase in the amount of income tax they pay, which has increased from £2,589 in 2021 to £3,972 today. All figures are in today’s prices, accounting for inflation.  

For example, inflation has been stripped out of wages to accurately compare what someone earned in the past to today’s living costs. 

Across ten core personal taxes, this couple pays £11,417 each year, up from £10,421 in 2021.

However, an average retired couple is better off than in 2006 when they would have paid £12,693 in taxes. Income tax, motoring taxes, the TV licence and alcohol duty are all lower today in real terms. 

And the same couple is £1,662 richer than they would have been in 1986, when income tax was levied at a much higher rate.

Dan Neidle, founder of the think-tank, explains: ‘Income tax rate cuts since 1986 – the basic rate has gone from 29 per cent to 20 per cent – leave the single people and the pensioners here modestly better off than under 1986 rules. 

So why the widespread belief that everyone is paying more tax?

‘A plausible explanation is that what people are actually feeling is the lack of growth in real incomes and living standards.’

Families hit the hardest

Families with young children, particularly where there is a high earner, have been the biggest losers and have borne the brunt of tax rises. 

Neidle says: ‘Families with children are worse off – even the average family – because higher VAT (15 per cent to 20 per cent) and higher council tax now outweigh their income tax cut.’

A family of four with two young children in nursery with a single earner who makes £110,000 pays an extra £1,646 a year in taxes than they did in 2021. Across the core personal taxes, this family pays £52,779 each year.

They hand over £12,493 more to the taxman than 20 years ago in 2006 and £18,214 more than in 1986.

The amount of income tax they pay has almost doubled in 40 years from £17,882 a year in 1986 to £27,974 a year in 2021 and £33,432 a year today. 

This group, who are likely to be in their 30s, are also the first of a generation to be saddled with tens of thousands of pounds worth of student debt. As their earnings rise, they have seen thousands go to paying off that loan.

Taking this into account, the same family with one high earner is £8,984 poorer than they would have been five years ago and £25,551 worse off than in 1986, as older cohorts would not have lost income to student loans and extra taxes. 

Higher earning parents must also grapple with some of the most vicious traps in the tax system that punish those who succeed at work.

For example, those who earn above £60,000 a year start to lose their child benefit entitlement.

One of the most costly tax cliff edges is at the £100,000 a year mark, at which point workers lose eligibility for free childcare hours and the tax-free childcare savings scheme, and start to lose their personal allowance (the £12,570 you can earn each year before paying income tax).

The quirk means that parents earning £99,999.99 could miss out on £38,000 worth of tax breaks and free childcare if their salary grows by as little as 1p.

Younger workers are also being penalised. A first-time buyer who earns £40,000 and is purchasing a home worth £350,000, would pay £2,014 more in tax than in 2021 and £3,051 when accounting for student loan repayments.

This is because the Chancellor cut the stamp duty threshold for first-time buyers – below which they pay nothing – from £425,000 to £300,000 in April 2025.

Why you pay up to 30 taxes

There are 90 different taxes in the UK – up from 54 two decades ago. It is the highest number of taxes in Britain since the end of the Napoleonic Wars in the early 1800s, according to research by Neidle.

In contrast, Germany has 60. So it’s no wonder that workers and pensioners feel like they are being hit from all sides.

Though there are typically a dozen core taxes, in reality most of us pay up to 30 different taxes when you include more obscure levies.

For example, the Government’s hidden subsidies for green energy and insulation schemes jack up our energy bills, or many of us will pay hundreds each year on goods imported to the UK, a hidden burden that raised around £5billion last year. 

There is also the ‘sugar tax’, which is levied on the soft drinks industry but passed down to households in the form of higher prices. 

Or for smokers, tobacco duty can cost hundreds of pounds each year. A tax on plastic packaging also adds to our bill at the supermarket tills.

How to cut your tax bill

There are some clever financial planning tricks you can use to slash your tax bill and protect your money from HMRC.

Anyone who is concerned about breaching an important threshold and losing a valuable benefit as a result can take measures to lower their taxable income, so it falls below these thresholds without needing to take a pay cut.

For example, you may want to make sure your taxable income stays below £60,000 if you want to remain eligible for child benefit or below £100,000 to retain up to £38,000 worth of Government childcare credits and funding.

One of the most straightforward ways to keep you below a tax cliff edge is by paying a larger amount into your workplace pension

each year. Sarah Coles, of AJ Bell says: ‘When you pay into your pension, it comes off what’s known as your adjusted net income – which is what’s used to calculate your eligibility for childcare support.

‘It means some people can boost their pension contributions, build a better retirement and bring themselves back off the edge of the cliff at the same time.’ This allows you to accept the extra salary without losing free childcare.

Most employers offer an agreement called ‘salary sacrifice’ for workers to add a larger portion of their salary directly to their pension before it is taxed.

This is extremely tax-efficient, as the salary exchanged is not liable to income tax or National Insurance. The employer may agree to match the contribution, too.

But beware – the Chancellor announced a £2,000 cap from April 2029 on the pension contributions you can make via salary sacrifice without paying National Insurance.

You can also pay more into a personal private pension (known as a Sipp, or self-invested personal pension) to duck back below a tax cliff edge.

While personal pension contributions can help, they often require filing a tax return and dealing with HMRC.

Parents near the threshold can also make charity donations to avoid losing the free hours of childcare and still be better off than if they had taken the pay rise.

For example, if you earn £105,000, you may be better off giving £5,000.01 away to charity if it means you retain the thousands of pounds worth of childcare funding.

The basic rate tax band increases by the value of the charitable gift, meaning that anyone donating the extra income they make above £100,000 pushes their taxable income to below that level.

Elsewhere, remember to make use of Individual Savings Accounts to avoid paying tax on your savings unnecessarily. You can save up to £20,000 a year into cash and stocks and shares Isas, where you pay no tax on earnings.

If you’re married or in a civil partnership, you can work together to reduce your taxes. Consider sharing assets between you to make full use of your allowances.

Coles says: ‘It’s worth considering the allowances of your family. If you’re married or in a civil partnership, you can transfer assets without triggering a tax bill, so you can both pay £20,000 into your Isas.’

Another example is a married couple where one person is a higher rate taxpayer and the other a basic rate payer can transfer any shares they have that generate dividends to the lower earner. This means the tax rate the couple pays on the dividends will fall from 35.75 per cent to 10.75 per cent.

Similarly, a higher rate taxpayer has a savings allowance of just £500 compared to £1,000 for a basic rate taxpayer.

So if you’ve maxed out your Isas, you can still minimise your tax bill by building up a larger savings pot in the lower earner’s name.

• How has your tax bill increased? contact me at j.beard@dailymail.co.uk