Taxes on British workers increased at the fastest rate of any advanced economy last year, according to new data from the Organisation for Economic Cooperation and Development, adding to mounting pressure on the Labour government over its economic management.
The OECD's annual survey found that the UK's so-called 'tax wedge' - a measure combining income tax and social contributions paid by both employees and employers - rose to 32.4% of income in 2025. That increase was the largest recorded across the OECD's 38 member nations, which represent the world's wealthiest economies.
The tax wedge is a standard metric used by the OECD to compare the overall burden of labour taxation across countries. It captures not only what workers pay directly but also what employers contribute on their behalf, giving a fuller picture of the cost of employment.
Political context
The findings arrive at a difficult moment for the Labour government, which is already facing scrutiny over its economic record amid the ongoing Iran war and its domestic fiscal consequences. Critics are likely to use the OECD data to argue that working people are bearing a disproportionate share of the country's financial pressures.
The Guardian, which reported the OECD findings, noted that the results place Britain at the top of the rankings for the speed of tax increases among rich nations - a distinction that is likely to fuel debate over Labour's tax and spending decisions since taking office.
Broader context
While the UK's 32.4% tax wedge represents a significant rise, it is worth noting that many European economies maintain higher overall levels of labour taxation. The OECD data highlights the rate of change rather than the absolute level, meaning Britain recorded the steepest year-on-year climb even if its total burden remains below some continental peers.
The OECD monitors labour tax trends across its membership as part of its broader work on fiscal policy and economic competitiveness. Rising tax wedges are generally associated with higher costs for businesses hiring staff and reduced take-home pay for workers, though economists differ on the broader economic effects.
No official government response to the OECD report was included in initial coverage of the findings.
