Where does tax money go?
The nutshell
Tax money pays for public services that the whole country shares, such as the NHS, schools, pensions, benefits and defence. The government decides how much of that money goes to each service.
Every fact on this page comes from official figures and non-partisan research. Each source tag — like OBR — opens where a fact comes from.
The basics
What tax money pays for
Every year the government collects money through taxes. That money pays for public services. Public services are the things a country runs together, like hospitals, schools and pensions. The largest areas of spending are pensions and benefits, health, and education.HoC
The Annual Tax Summary
The government sends each taxpayer a yearly note called an Annual Tax Summary. It shows how the Income Tax and National Insurance a person paid was split across public services.GOV Income Tax is a tax on money earned. National Insurance is a second tax on pay that helps fund the state pension and some benefits.
The biggest bills
Some services cost far more than others. The Office for Budget Responsibility checks the government's sums. It expected welfare, which is money paid out as pensions and benefits, to cost about £333 billion in 2025 to 2026. It expected health to cost about £204 billion.OBR The Institute for Fiscal Studies says health is the largest single service, at almost £1 in every £5 the government spends.IFS
Paying to borrow
The government does not only spend on services. When the government borrows money, it must pay interest on what it owes. The Office for Budget Responsibility expected that interest to cost about £110 billion in 2025 to 2026.OBR That makes it one of the largest single costs of all.
- The largest single areas of spending are pensions and benefits, health, and education, according to the Institute for Fiscal Studies
- The government publishes a yearly Annual Tax Summary that shows each taxpayer how the tax paid was split up
- Interest on money the government has borrowed is one of its largest single costs, at about £110 billion in 2025-26, according to the Office for Budget Responsibility
- Tax money is not saved in one pot for one service, as most goes into general funds that pay for everything at once
- The biggest single area can differ by source, because social protection can be counted as one area or split into pensions and working-age benefits
- Day-to-day spending on services is separate from money borrowed and invested, so headline totals can mean different things
The deep end6 min
How spending is counted
The total the UK spends is called Total Managed Expenditure. The House of Commons Library reports that the UK's public sector was planned to spend about £1,347 billion in 2025 to 2026.HoC That total is split into areas called functions, such as social protection, health, education and defence.
The main areas, with figures
The Office for Budget Responsibility sets out what each area is expected to cost. For 2025 to 2026 it expected cash paid out through the welfare system to cost about £333 billion, health about £204 billion, education about £95 billion, and defence about £39 billion. It also expected about £157 billion to go on capital investment, such as roads and buildings, and about £110 billion on interest on the national debt.OBR
Why sources name a different biggest area
Different sources can name a different largest area. The Office for Budget Responsibility and the House of Commons Library count social protection, which covers pensions and benefits, as one area, and that area is the largest.HoC The Institute for Fiscal Studies splits social security into pensioner benefits and working-age benefits. Counted that way, health becomes the largest single area, at almost £1 in every £5, and health, social security and education together make up more than half of all spending.IFS
Where the choices are made
How the money is divided is decided by the government at events called the Budget and the Spending Review. A government can put more into one service by putting less into another, by raising more tax, or by borrowing more. Political parties and research groups argue for different priorities, and the largest areas, such as health and pensions, are often at the centre of that debate. The Annual Tax Summary is one way the government shows the public where the money went.GOV