FAQ - The Daily Bread in the UK

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The annual release of the budget proposal from the UK government last month, once again sparked interest in the Daily Bread calculator, which was featured at the Guardian.

This FAQ is intended to give you a quick walk-trough on how and why we made the calculations behind the Daily Bread. If you have any questions or comments, we will be thrilled to hear from you on the OpenSpending list.

How does Daily Bread calculate the tax I pay?

We use the tax rates available at the HM Revenue and Customs (HMRC) to calculate the tax you pay. For each year from 2000 to 2012, HMRC provides information about the amount of money you could earn before you had to start paying tax on it. In 2013-14 you can earn £9,440 before you are taxed.

We then take factors (deductions), which will raise your non-taxable income limit even higher. For instance blind people receive an additional £2,100 to their £9,440 non-taxable income limit, which bring their non-taxable income to £11,600 (that’s £2,160 + £9,440).

Other factors, which increase your non-taxable earning are:

  • if you are married
  • if you have turned 75 years old
  • if you are between 65 to 74 years old

We then record the tax bands for each year to the present. Tax bands work as follows: if you earn up to £32,000 you pay 20% of your income in tax, if you earn up to £150,000 you pay 40% of that in tax.

As we have now got the tax rate, we record your national insurance contribution for each year. National insurance is an extra tax you pay so you are entitled to certain state benefits, including the state pension. The contributions you pay depend on how much you earn and whether you’re employed or self-employed. You stop paying National Insurance contributions when you reach state pension age. So we have in the script we have different levels of income and the national insurance you are required to pay.

Which Year does Daily Bread calculate taxes for?

The Daily Bread uses information from the National Statistics report of the effects of taxes on household income to calculate tax rates. Currently the calculations are based on the tax rates for 2010 as these are the most recent figures available from the Office for National Statistics. We are therefore unfortunately not able to apply the tax rates for 2013-14 to The Daily Bread, even though the rates are available in our TaxMan.

Why is incomes at £10,0000 at 4,621 despite having a £9,440 non-taxable income?

The Daily Bread include several other indicators in its calculation besides the deduction of the non-taxable income.

According to the Office for National Statistics, who estimates the average taxes paid by various incomes brackets, the breakdown of the average amount of tax paid by someone earning £10,000 in 2010 is:

  • direct taxes: £1122
  • indirect taxes vat: £1318
  • indirect taxes tobacco: £407
  • indirect taxes alcohol: £90+112
  • indirect taxes motoring: £268+84
  • indirect remainder: £1220
  • Sums to: £4621

How does Daily Bread workout how much my tax contributes to public spending?

We use figures from Country Regional Analysis (CRA) to calculate your daily contribution to public spending. The current calculations are based on data from CRA from 2010, in order to provide synchronized across the various calculations we do. You can find the CRA data we use on the Datahub under the name “OpenSpending-compatible CSV”.

Where can I find the code behind Daily Bread?

The code for Taxman, which calculates taxes is on Github See the introduction to Taxman here.

The code for Where Does My Money Go is available here.