We all hate these hidden taxes!

Cliff D'Arcy
by Lovemoney Staff Cliff D'Arcy on 27 February 2012  |  Comments 10 comments

These 10 sneaky 'stealth' taxes cost Brits over £75 billion each year.

We all hate these hidden taxes!

Britain's tax system is unbelievably, amazingly, fantastically complicated. As proof, the 'Red Book 2011/12' guide to UK taxes is over 10,000 pages long and spread across six volumes and one index volume. 

Of course, we are all familiar with the big, well-known taxes that gobble up lots of our money, such as income tax, National Insurance and VAT (Value Added Tax). Together, these three headline taxes will generate almost £350 billion of expected government takings of £577 billion this tax year. 

However, there are hundreds of lesser-known taxes that go towards the enormous cost of this country. Here are 10 of these sneaky 'stealth' taxes that, together, take tens of billions of pounds from our pockets each year. I have listed these taxes from largest to smallest, based on projections for the 2011/12 tax year from the Institute for Fiscal Studies. 

1. Fuel duty 

Of all the UK's stealth taxes, fuel duty (on petrol and diesel) is the largest. This tax on driving is expected to raise £29.8 billion. A litre of diesel costing 145p at the pump includes about 87p of taxes, or 60% of its total cost. What's more, fuel duty is to rise in August by 3.02p per litre. Ouch! 

2. Alcohol duty 

In Britain, we pay alcohol duty on spirits, wine, beer and cider -- the stronger the drink, the higher the tax. For the strongest spirits (those above 40% alcohol by volume), most of the retail price consists of duty. Alcohol duties come to £9.4 billion

3. Stamp duty 

Stamp Duty Land Tax (SDLT) is charged on UK property and land transactions. It is paid by the buyer, and ranges from 0% on properties sold for up to £125,000 (£250,000 for first-time buyers before 25 March) to 5% on sales valued above £1 million. Also, there is stamp duty of 0.5% levied on shares and securities bought via the stock market or stock brokers. 

Together, these two duties bring in £9.1 billion

4. Tobacco duty 

Thanks to three separate taxes on tobacco, duties account for five-sixths (83%) of the retail price of a pack of 20 cigarettes. In other words, a pack of coffin nails costing £7.20 includes £6 of tobacco duty and VAT. Tobacco duties will raise £8.4 billion

5. Vehicle Excise Duty 

Since April 2010, the cost of Vehicle Excise Duty ('road tax') for new cars is based on CO2 emissions and fuel type. The least-polluting vehicles pay no VED, but cars in the top band pay £1,000 a year. VED is forecast to be £6.6 billion. 

6. Air Passenger Duty 

Air Passenger Duty (APD) is a duty charged on passengers flying from UK airports. There are eight different bands of APD, based on four destination bands and economy and premium class. These rates of APD vary from £24 per person to as much as £170 for long-haul flights. APD will raise £2.8 billion

7. Insurance Premium Tax 

Insurance Premium Tax (IPT) is a tax on general insurance premiums, but not life insurance premiums. The standard rate is 6%, but there is a higher rate of 20% for travel insurance and some extended warranties. IPT will contribute £2.7 billion to the government's coffers in 2011/12. 

8. Capital Gains Tax 

When you make profits from selling shares, property (not your family home) and other assets, you may have to pay Capital Gains Tax (CGT) on these gains. However, each adult has a yearly tax-free CGT allowance (currently £10,600) so most Brits don't pay CGT. Even so, it is expected to raise around £2.2 billion

9. The National Lottery 

The National Lottery has frequently been described as 'a tax on people who are bad at maths'. This is because it pays out only 50p in prizes for every £1 staked. What's more, 12% of lottery revenues go to HM Treasury, which pocketed nearly £700 million from Camelot in 2010/11. Adding in another £1.5 billion of other betting and gaming duties gives total gambling taxes of £2.2 billion

10. Inheritance Tax 

Inheritance tax (IHT) is charged at 40% of the value of your estate at the time of your death. However, the first £325,000 of your estate is taxed at 0%, with this nil-rate band doubled to £650,000 for married couples and same-sex Civil Partners. Although there are dozens of legal ways to dodge IHT, it will still raise £1.9 billion

Our £75 billion bill 

In total, these 10 stealth taxes add up to a whopping £75.1 billion this tax year. This comes to nearly £2,900 for each of the UK's 26 million households. Furthermore, these 10 hidden taxes account for more than an eighth (13%) of total government revenues in 2011/12. 

Finally, stealth taxes -- especially those on spending -- are regarded as 'regressive'. This means that they often hit the poorest members of society hardest. Even so, politicians seem to favour ever-higher 'sin taxes', so we should expect duties on drinking, smoking, gambling, driving and flying to keep rising steeply! 

More: Save tax by opening an ISA! | Top tax havens for babies, children and teens |  How to slash your council tax bill

Enjoyed this? Show it some love

Twitter
General

Comments (10)

  • buywhenhigh
    Love rating 51
    buywhenhigh said

    How else are we going to pay for millions of spongers to live the life of Riley :)

    Report on 27 February 2012  |  Love thisLove  2 loves
  • easygoing
    Love rating 170
    easygoing said

    buywhenhigh and your proof is?

    Sadly there is a distinct lack of true facts in all these matters. There are the 'facts ' that newspapers print where they compete to escalate the horror stories and then there are the 'facts' produced by government departments to appease their political masters.

    Sadly if anyone does have the true story we aren't going to get it.

    Report on 27 February 2012  |  Love thisLove  1 love
  • laplennerie
    Love rating 20
    laplennerie said

    I go to France regularly. Tax on alcohol is much lower and indeed it makes sense to stock up on wine in bulk. I hardly ever buy alcohol in the UK. French gaziol is around 1.39 euro (Intermarche price) which still makes a saving compared to UK. My next step will be to purchase a french reg car. MOT every 2 years. Ins prices the same as UK but no car tax.

    Report on 27 February 2012  |  Love thisLove  1 love
  • raba9
    Love rating 16
    raba9 said

    I woudl suggest the only oneof these taxes that is hidden is that on the Lottery. The remainder are well known and can be avoided by giving up everything and becoming a hermot! However, one can plan one's way around CGT and IHT. Never forget that IHT is known as "the voluntary tax". Anybody who pays that one in most circumstances has got the planning wrong.

    Report on 27 February 2012  |  Love thisLove  1 love
  • Henry-GBG
    Love rating 57
    Henry-GBG said

    Nice one but how do you suggest that the government raises the revenue needed to run the country?

    Hint: there is one tax that is an exception to the rule that taxation is robbery.

    Report on 27 February 2012  |  Love thisLove  0 loves
  • Offa
    Love rating 40
    Offa said

    my suggestion is that the givernment reduces its spending like the majority of its population are having to do. Thtat is really out of the question for governmnet of course as they can do nothing wthout endliess streams of other people incomes' to distribute to good causes. Such as foreign dictators, foreign government to develop nuclear weapons, mates in banks toprope up so that ex cabinte ministers can have a good job after politics. The list goes on . Politicians are all about self-interest- not about assisting the majority in improving living standards.

    Don't forget that the government have been assisting their mates to avoid higher tax by paying them through companies, even the HMRC have been doing that so I am not at all sympathetic to the governmnet's need to stifle me with the incredible burden of tax.

    Report on 27 February 2012  |  Love thisLove  2 loves
  • Ogilvie
    Love rating 0
    Ogilvie said

    It is about time(unlikely though it is to happen) that polititians were honest with us. All taxes should be removed except for Income Tax. Then everybody pays for the running of the country according to their means. At the moment if you drink, smoke or drive,including buying anything delivered by road, you are paying a disproportionate amount towards the upkeep of the politians, sorry country. With all the other taxes gone the number of civil servants could also be reduced substantially thereby saving the country even more money.

    Report on 04 March 2012  |  Love thisLove  0 loves
  • chrisjej
    Love rating 0
    chrisjej said

    You left out arguably the biggest hidden tax of all: quantitative easing. Did someone say 275 billion? I think that most people don't realise that this has been one of the biggest hits of late on, amongst other things, pensions.

    Report on 04 March 2012  |  Love thisLove  0 loves
  • CuNNaXXa
    Love rating 411
    CuNNaXXa said

    I remember an article on LoveMoney about how Blair (former PM) was only paying a pittance in tax compared to what he was earning.

    As a few LM members have said, politicians are in it for themselves, and while they expect us to pay our dues, they are the first to find loopholes that allow them not to pay their dues. In addition, they also know how to exploit the system, usually fiddling their expenses, or claiming for mortgages on second homes.

    As for funding our way of life, I have absolutely no qualms about paying my taxes to ensure an excellent education system, a national health service that is the envy of the world, and a network of roads that allows us to transverse the country.

    What I don't want to do is to pay taxes so that idiots in charge don't squander it on hair brained schemes that have no chance of working, or giving my money to foreign countries because they have managed to mis-manage their own funds, or any other waste.

    Our MPs should have a Duty of Care to ensure that money they collect in the form of taxation is spent properly. If they tax me to squander my money, then that is, in my opinion, theft.

    Report on 01 May 2012  |  Love thisLove  0 loves
  • bengilda
    Love rating 100
    bengilda said

    Parliament should force the Government to cut unnecessary spending. There is so much that is completely unproductive and irrelevant to the wellbeing of the citizens. So many public funded people are employed in regulating the rest of us at huge cost to the nation's income. Cut out the petty regulation, just abandon such as the Planning Portal, the EHRC, The Potato Council and all the other parasitical nonentities that have grown onto us. Government stop increasing or adding ANY more taxes for ANY reason, bar ALL new posts within central and local government.

    Cut welfare payments on a sliding scale, at present they are too easily obtained and too generous in the present economic climate.

    Above all start to live within the nation's means.

    Report on 14 June 2012  |  Love thisLove  0 loves

Post a comment

Sign in or register to post a reply.

Our top deals

Credit card
company
Balance transfers rate and period Representative
APR
Apply
now

Barclaycard 31Mth Platinum Visa

0% for 31 months (2.99% fee) Representative 18.9% APR (variable) Apply
Representative example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 18.9% (variable), representative 18.9% APR (variable). Credit available subject to status. A Balance Transfer fee of 3.5% will be applied, then reduced to 2.99% by a refund (terms and conditions apply). Plus an additional £20 fee refund on balance transfers over £2000.

Barclaycard 30Mth Platinum Visa

0% for 30 months (2.89% fee) Representative 18.9% APR (variable) Apply
Representative example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 18.9% (variable), representative 18.9% APR (variable). Credit available subject to status. A Balance Transfer fee of 3.5% will be applied, then reduced to 2.89% by a refund (terms and conditions apply). Plus an additional £20 fee refund on balance transfers over £2000.

MBNA 30Mth Platinum Credit Card Visa

0% for 30 months (2.89% fee) Representative 18.9% APR (variable) Apply
Representative example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 18.9% (variable), representative 18.9% APR (variable). Credit available subject to status.
W3C  Thank you for using Lock, Stock and Two Smoking Barrels