Britain is facing the highest tax burden since the days of Harold Wilson as the Treasury squeezes more cash out of families and businesses.

The Exchequer is expected to rake in £737.4billion of tax revenue in 2018-19, up from £699.7billion last year, driven by higher payments from workers due to the country's jobs miracle.

It will mean the overall tax take is equivalent to 34.6 per cent of Britain's economy, a level not seen since Wilson was Prime Minister in 1969-70, when the figure hit 35 per cent.

Campaigners said Chancellor Philip Hammond must do more to cut taxes for ordinary people if the Tories want to stay in power and convince families that capitalism works

Campaigners said Chancellor Philip Hammond must do more to cut taxes for ordinary people if the Tories want to stay in power and convince families that capitalism works.

Matt Kilcoyne, of the free market Adam Smith Institute, said: 'The Chancellor is picking the pockets of ordinary workers to fund his deficit reduction targets.

'His pledge to end public sector austerity will only be welcomed if it doesn't force workers to impose their own personal austerity at home because of high taxes.'

The tax burden will hover at around 34.6 per cent until 2023-24, according to the Office for Budget Responsibility (OBR), higher than under the last Labour government, when it hit 33.7 per cent at most.

Much of the increase in taxes is driven by surging employment, with 3.5m more people in work since the Conservatives came to power in coalition in 2010.

The unemployment rate, meanwhile, has fallen to 4 per cent, its lowest since the 1970s. When employment is higher more people pay national insurance and tax. Rising wages also boost the take.

Pay is expected to grow by 3.1 per cent this year, with rises staying above 3 per cent for the following five years.

Income taxes will make the biggest contribution to the state's coffers this year, up from £180.6billion to £192.4billion, according to the OBR, followed by £137.7billion from national insurance and £131.7billion from VAT.

Income taxes will bring in £24.7billion more by 2025 than previously predicted by the OBR. It came as the Chancellor hailed the rising tax take for giving him more room as he seeks to cut borrowing.

As a result, the deficit, which is the difference between the amount the Government spends and what it earns from taxes and other income, will be lower than previously thought.

It will total 1.1 per cent of national income this year, or £22.8billion. By 2023-24, it will drop to just 0.5 per cent of GDP or £13.5billion.

Public debt will fall to 82.2 per cent of the size of the UK economy next year, and will drop until it hits 73 per cent in 2023-24.

Michael Izza, chief executive of the Institute of Chartered Accountants of England and Wales, said: 'The improvement in the public finances means Philip Hammond has left himself the opportunity to open the chequebook in the Budget, if and when we have more clarity on Brexit.'