Millennials Paying More Tax Than Boomers

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May 26th 2019
Tax Week 8
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Millennials Paying More Tax Than Boomers

6 percent decrease in tax paid by baby boomers between 2011 and 2016.

Between 2015 and 2016 'Baby Boomers' paid £20 billion more in tax than 'Millennials', but the proportion of overall income tax paid by boomers is actually decreasing.

The amount of money that can be put into pensions tax-free is being lowered, income tax changes are skewed more to penalise higher earners and annuities are no longer mandatory so tax on annuity income is reduced. These are some of the factors that show younger people shouldering more of the tax burden.

The headline figure reported by accountants Moore Stephens is mainly due to demographic changes - baby boomers are retiring and taxable income therefore decreases. On the opposite side, millennials are now in their early 40's and climbing the employment ladder into higher paid jobs.

Additionally, more stamp duty is being paid by millennials but this is due to older people unlikely to be buying homes and even downsizing or moving into retirement homes.

This has lead to a six percent drop between the proportion of tax paid by boomers compared to millennials and the factors stated above show the trend will continue - with further care costs from an aging population being passed to the young.

Millennials, people born between 1981 and 1996, now make up 56,000 of the UK's Company Directors with last year seeing a 37 percent increase in the number of young people going for entrepreneurship. Facing issues find work as new graduates, the incentives to go it alone has seen many take this route.

The pressure is heavy on millennials with a twenty percent rise in insolvencies last year for the group, whereas boomer insolvencies dropped by ten percent. In 2017, 5,650 people under 25 became insolvent. The rising property prices leading many to pay large proportions of their salary toward housing cost and leaving little for savings to cushion gaps in employment.

Insolvencies among under 35's rose by a fifth in 2018, with insolvencies of those over 55 dropped, and over 65's insolvencies dropped by nine percent.

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