10 hidden taxes you’re paying without realising, from energy bills to chocolate bars

In a post-Covid world, air passenger duty will raise almost £4bn a year in tax. This is equivalent to about £150 a year to our “average” household. Clearly we have discretion about how many flights we choose to take each year but, in what we hope will become a post-Covid world, a holiday in the sun is what many of us now need.

I cannot ignore the plastic bag tax. This rose from 5p to 10p a bag last April. It applies to single use bags and now extends to all shops. I approve of this measure for two reasons. 

Firstly, I cannot abide litter, such as discarded plastic bags, along with the mindless people who despoil our city streets and beautiful countryside. 

Secondly, the money raised is passed on by the supermarkets to support good causes. They must report sales and donations to the government each year. I am not convinced about the use of plastic bags for life which supermarkets are offering. These get around the current rules which only apply to single use bags, but what is wrong with a traditional fabric bag which you can keep ready in the car?

We sometimes assume that VAT does not apply to food, but that is not true. For example, did you know that VAT applies to catering, alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water? VAT also applies to pet food unless it is for working dogs.

Free of EU restrictions I had hoped that the 5pc VAT charge on domestic heating oil and gas would have been abolished, but it now seems that the EU was just a convenient excuse for keeping it. Ending this would cost the government about £1.7bn a year. That would save the average household about £63 a year, although with higher energy prices some estimate the cost at £90 a year. I accept, however, the argument that there are better ways of targeting help at poorer households.

Of course by far the largest hidden tax is fuel duty. Not only does this raise almost £30bn a year for the government, equivalent to about £1,100 a year to a motorist in our “average “ household, but VAT is charged on top. Overall tax accounts for about 55pc of the price you pay at the pump. 

Some people may consider this a mere whinge, but it is important that the general public know how much we are paying for the services we receive, and where it comes from.

Tax Hacks is written by Mike Warburton, previously a tax director with accountants Grant Thornton, and is published twice a month on Tuesdays. You can email Mike on taxhacks@telegraph.co.uk 

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