November 13th, 20145 Taxes You Didn’t Know You Were Paying
Ok – everyone knows about income tax, National insurance and VAT – but there’s plenty of other ways the taxman gets a grip on your money. Here’s 5 of the lesser known ways.
Income Tax on Chargeable Events
This can fall due on certain life insurance and capital redemption policies as well as life annuity contracts. Most people view these products as ways to save for their future so it can come as a shock when tax can be charged at maturation and it takes careful planning to avoid stumping up. It’s also vital to make sure you get the paperwork correct. In one case a chap ticked the wrong box when cashing in his policies and got a tax bill of over £1 million! When he appealed the Judge was ‘sympathetic’ but awarded the case to the taxman.
Higher Rate of Insurance Premium Tax (IPT)
IPT is usually charged at 6% on insurance products but there is an oft-hidden surcharge for some products, the most common of which are travel insurance and mechanical or electrical appliances insurance. On these very common products you’ll be charged 20% in tax.
Climate Change Levy (CCL)
Most people think this is a tax paid by the energy companies but it is in fact us, the consumers, who are charged the CCL – the energy companies simply collect it from us. The CCL is charged at 0.541p and 0.188p per kWh of electricity and gas used respectively. This tax raises just £800m per year, although the imposition of this tax was designed to create energy efficiency rather than funds to combat climate change.
Alcohol Duties
OK, everyone knows that they pay duty on wine, spirits and beer but not everybody knows that, in general, the higher the strength of the alcohol the higher the duty. So you will pay 42p of beer duty on a pint of 4% ABV lager while you would pay a whopping £1.09 on a pint with 8% ABV. A pretty good reason to take it easy we’d say.
Gambling Duties
These cover a wide range of activities including bingo, general betting, the pools, quiz machines, fruit machines and even the National Lottery. Most duties are levied on the profits of the gambling company but Lottery duty is taken straight from the entry fee. For each £2 National Lottery ticket you purchase 24p goes to the government in the form of lottery duty. So in effect, the government wins the Lottery every week!
If you need any advice about your tax situation then please get in touch. Call us on 0151 426 4512 or email us Share this post
