Taxes on UK workers have risen at fastest rate in rich world, says OECD

"Britain's tax wedge, which estimates total taxes on labour paid by employees and employers, minus cash benefits received by working households, increased by 2.45 percentage points last year, the most in the OECD."

"The rise in the UK was linked to Rachel Reeves's 2024 autumn budget increasing the rate of national insurance contributions paid by employers, alongside the impact of fiscal drag."

"Despite the rapid increase, the measure of tax on work in Britain, at 32.4%, remained below the OECD average of 35.1%, with significant variations across different countries."

In 2025, Britain's tax wedge increased by 2.45 percentage points, the highest among OECD countries. This rise is attributed to higher national insurance contributions and fiscal drag. While 24 countries saw an increase in their tax wedge, Britain's rate remains below the OECD average. The increase is linked to Labour's budget decisions, despite previous promises not to raise taxes on working individuals. The tax wedge in Britain stands at 32.4%, compared to the OECD average of 35.1%. Other countries with notable increases include Estonia, Germany, and Israel.

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