Individual Income Tax Rates Australia and UK Compared 2015/16

Benjamin Franklin once said “In this world nothing can be said to be certain, except death and taxes.

Tax BurdenToday I’m going to talk about the second certainty on his list, taxes.

Every so often I like to check the income tax rates in Australia and compare them to those in the UK. Last time I did this was for the 2013/14 tax year in my post called Australia versus the UK; Taxes and Pensions.

If you check back on that older post, you’ll find some interesting information about pensions and Australian superannuation which I won’t repeat again in this update. All we are interested in here is the current tax rates for individuals.

Here they are:

Individual income tax rates for Australia applicable for tax year 2015/16

tax rates 2015-16Image courtesy of the ATO.

Update for tax year July 2016 to June 2017

The Government announced that from 1 July 2016, for individual taxpayers, the marginal tax rate of 37 per cent will start at $87,000 instead of the current $80,000.

This new threshold will also apply to foreign residents.

Please adjust the table above for tax calculations for 2016/17.

………………………………………….

Back to the original post and 2015/16.

To save you checking back, I can confirm that these tax rates are absolutely no different from two years ago. So the good news is that the percentages of tax payable haven’t risen, the bad news is neither have the tax free thresholds.

What is very different though is that our Medicare levy has gone up from 1.5%, to 2%.

UK and Australia tax rates compared

As I’ve mentioned before, comparing tax rates is a ridiculously difficult thing to do for so many reasons. Each of our countries has taxes for other things, like house purchases. And then the UK has VAT, whilst Australia has GST.

Also, what you get for your tax dollars varies between our two countries. For example, the UK’s NHS offers more comprehensive health cover than Australia’s Medicare.

Bearing all this in mind though, we can still do a straight comparison on individuals income tax payments combined with the UK’s National Insurance and Australia’s Medicare levy.

And these comparisons can be made real easy with the help of the free online tax calculators available for both our countries. So, let’s do it.

For some time now, the average full-time wage in Australia has been around the $70,000 mark, so let’s work with that.

Now all I need to do is punch that number into taxcalc.com.au who will work it all out for me…

tax-calc-ozToo easy.

As we speak, the exchange rate is one GBP = 2.12 Aussie dollars. By my maths, that means $70,000 is equivalent to £33,018.

So now I need to punch that number into The Telegraphs Income Tax Calculator and quick as a flash they will tell me…

uk-taxcalcBy the way, age makes no difference other than if you are over 67, you would no longer pay National Insurance.

Conclusion

  • In Australia, your income tax and Medicare levy combined is $15,697
  • In the UK, your income tax and National Insurance combined is £7479

£7479 converted back into Australian dollars at the same exchange rate is $15,855.

Therefore, in Australia, you pay $158 a year less than in the UK.

  • But then, as mentioned, our health service isn’t as comprehensive as the UK’s NHS.
  • But then again, our GST is 10%; VAT in the UK is currently 20% at the standard rate.
  • Also, here in Australia, employers do have to pay an extra 9.5% of income into the employees Superannuation account (pension) for every employee earning more than $450 per week.

Where would you be better off?

I don’t know, but there really doesn’t seem to be very much in it.

Final word

Australia’s leaders, that’s federal government and state government, met recently to discuss ways of increasing taxes in Australia. Apparently there just isn’t enough money going into the pot at the moment to take care of the rising health services costs.

So, possible solutions currently being proposed are raising GST from 10% to 15% or raising the Medicare levy another 2% to 4%. Other options include increasing property taxes or income tax itself.

Nothing has yet been decided, but here in Australia I think we can add a third certainty to our earlier discussed shortlist.

Taxes will be going up.

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{ 4 comments… add one }
  • Vladimir December 24, 2015, 11:29 pm | Link

    How about sick pay and pension? Uk sick pay is rubish and pension is very low.

  • V.v.pimpale August 18, 2015, 11:39 am | Link

    My son is already settled in Australia.i have one son and three daughters.out of three two r settled in India and one is in u.s.a..can I get long term visa for australia to stay with my son.pl.advise.

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