Budget 2012: New tax statements will reveal how the government spends your cash

TAXPAYERS across the UK are to receive an annual statement showing how much they are paying to the government each year and what that money is being spent on.

Chancellor George Osborne is to announce in the Budget that a new transparency measure is to be introduced to give people an idea of how much of their earnings goes to individual areas of government spending.

The move has been previously suggested by Tories. Privately, they have said that introducing the measure now is aimed at winning over hearts and minds for their reforms on welfare by revealing how much taxpayers are helping contribute to support state benefits and pensions.

The new tax statements will appear next year and come just after the welfare act has been passed by parliament limiting benefits per household to £26,000, slashing housing benefit, reviewing disability payments and trying to force people back to work.

The breakdown reveals that an average earner who makes £25,000 a year would pay £5,700 in tax, with around one third, £1,900, going on welfare with the next biggest amount, £992, spent on health. The case study also shows how much is being spent on the national debt, with £363 of the £5,700 going on interest payments. The amount is more than is spent on the defence budget which accounts for £329 in the case study.

A government source said: “This is about transparency and showing the UK’s 20 million tax payers how the money raised from their earnings is being spent.”

The new tax statement however, will not have a devolved version. Items such as health and education could in reality be different for taxpayers in Scotland, Wales and Northern Ireland.

1 How much you earned and how much of it went on tax

2 What the breakdown was on the taxes you paid in income

3 How your tax was divided up between departments

4 A breakdown of where different departments spent your money

5 Advice on where to go to calculate your tax