Did you know that for 2025, you only started earning your own income on 12 June? Until that ‘tax freedom day’ the average taxpayer essentially worked the previous 162 days for HMRC.

Although based on average figures, tax freedom day provides a good indication of how the overall tax burden is increasing. Tax freedom day is now more than three weeks later than pre-Covid, and it’s possible that by 2030 it could fall more than half way through the year.

The averaged figures hide the fact that the wealthiest 1% of taxpayers are paying over 28% of the UK’s total tax take.

Tax burden

The tax burden is rising across the board due to frozen thresholds (fiscal drag) along with increased rates of tax. However, business owners in particular have been targeted in recent years:

• The rate of corporation tax has increased considerably where a company’s profits exceed £50,000; and
• The tax rates on dividends have increased at the same time the dividend allowance has been cut.

Since April 2025, business owners have also felt the impact of much higher employer national insurance costs.

Moving the dial

Tax freedom day for a particular taxpayer will be pushed further forward as various tax thresholds are crossed.

One of the costliest thresholds is when income hits £100,000, because the taxpayer will then face a marginal tax rate of 60%.

However, tax planning measures will usually be an option at this level of income, and they can move the dial back to earlier in the year. For example, most taxpayers can make additional pension contributions, and employees could enter into salary sacrifice arrangements or trade a salary increase for shorter working hours or increased holiday entitlement. The self-employed may simply decide to restrict the amount of work they do, and so their earnings, may be an option.