Energy, taxes and insurance – how do our key bills break down?

With almost all our major bills soaring in 2025, we've analysed exactly what makes up each of our monthly outlays.

Every month, our bills seem to creep higher – from energy and insurance to the price at the pumps.

For many Brits, this leaves us wondering: are we really paying for what we use or being quietly fleeced?

To find out more, loveMONEY has crunched the numbers on some of our biggest household expenses to reveal how our bills really break down (spoiler alert: there's an awful lot of tax involved).

Energy

With the energy Price Cap rising again this month to an average of £1,755 per household, it’s easy to wonder: am I simply being taken for a ride?

To get some answers, we looked at the latest dual fuel bill breakdown (ie gas and electricity) from regulator Ofgem.

According to the statistics, a typical bill works out as follows:

Wholesale costs (the cost of the gas and electricity itself): 34.63%

Network costs (including building and infrastructure): 25.35%

Operating costs (the expenses involved in running a business): 18.62%

Environmental and social obligations: 15.33%

VAT: 4.76%

Other direct costs: 2.24%

Here’s how this stacks up on the average annual bill for October to December (click image to view a larger version).

Sitting on our money, confusing bills, hefty Standing Charges and other ways energy companies cash in

Car insurance

With spiralling fuel costs and road tax, the financial burden of car ownership is becoming increasingly painful by the year.

And car insurance is one of the main offenders.

Although data from the Association of British Insurers (ABI) reveals that typical premiums fell by £60 over the past year, they still stand at £562 per year.

Looking more closely at the figures from the ABI, this is what the key components of a typical policy cost the average motorist.

Injury: 30%

Damage to the driver’s vehicle: 20%

Damage to other vehicles and property: 19%

Overheads: 17%

Theft: 4%

Uninsured drivers: 4%

Replacement vehicles: 4%

Windscreens: 2%

Worryingly, this isn’t the full extent of the pain facing drivers.

On top of what you pay in premiums, you’ll face an additional 12% in Insurance Premium Tax – this is a Government levy applied to nearly all insurance policies in the UK.

It’s automatically included in your policy costs, so you won’t see it listed as a separate charge, but it effectively increases the overall cost of your cover.

You'll notice the actual percentage in our graphs below is slightly lower, which is down to the way IPT is applied. See our detailed explanation in the disclaimer at the end.

Car insurance: the cheapest cars to insure 2025

Home insurance

Of course, we can’t mention car insurance without also investigating the cost of protecting our homes.

While every policy is different, leading insurer AXA estimates that our policies are distributed in the following proportions:

Claims: 50% to 90%

Profit: 5% to 15%

Insurance Premium Tax: 12%

Expenses (including commission): 20% to 30%

Industry levies (including payments to regulatory bodies): 5% to 15%

So, what does this mean on the average annual £391 policy? (Click to view larger image)

How to cut the cost of your home insurance

Petrol

When it comes to fuel costs, we typically break these down into four key areas: Fuel Duty, VAT, retailer profits and wholesale prices – i.e., the underlying price of the fuel itself.

At the time of writing, the average cost of petrol stands at 134.76p per litre, according to research body Statista.

Of this, an eye-watering 57.95p goes towards Fuel Duty, while a further 20% is lost to VAT.

Overall, this means that more than 60% of the price you pay at the pumps goes directly to the Government.

And how much of our hard-earned cash lines the pockets of major retailers?

According to figures from the Competition and Markets Authority reported in The Guardian, supermarkets’ margins have jumped to 9.1% from April to June 2025, while other petrol stations have bagged a far higher 10.6%.

Last but not least, we also need to factor in the cost of the petrol itself – i.e. the commodity we’re actually paying for – which is typically known as the wholesale price.

Unsurprisingly, this has fluctuated enormously in recent years following the war in Ukraine, with the latest RAC estimates putting this figure at 97.93p per litre.

Cut fuel costs: find the cheapest petrol and diesel prices near you

Diesel

Say, you prefer to drive a diesel model.

According to data site Statista, the average price of diesel now stands at 142.92p, with supermarkets’ margins of 8% to 9.1% from April to June 2025, and other petrol stations have bagged a far higher 10.6%.