In the UK there are plenty of sneaky taxes that can catch you off guard.
Taxes are an inevitable part of life, and in the UK, the standard value-added tax (VAT) rate has been set at 20%. However, there are also reduced and zero rates that apply in certain situations.
There are certain loopholes the government take advantage of to hit products with extra charges. For example, ice cream is not considered frozen food along with other treats such as ice lollies, and sorbets, so this loophole allows the government to subject those goodies to a standard VAT of 20%.
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Hot takeaway food is yet another item that is surprisingly subject to taxation. While cold takeaway is off the hook, hot takeaway food and beverages are fair game for standard taxation.
KyrosAML.com have put together a list of the UK taxes you’ve probably never known you paid.
Double-glazed windows
Double-glazed windows are one of the most popular choices for energy-efficient home improvements. However, the government seems to disagree.
Unlike other installations, such as insulation, solar panels, wind turbines, and wood-fuelled boilers, double-glazed windows do not qualify for a reduced VAT rate. This means homeowners looking to save on energy bills and reduce their carbon footprint must pay the full 20% VAT for this product.
Gas and Electricity
In general, we could agree on the fact that gas and electricity are essential utilities in many households. While this opinion may be a valid one, these utilities still fail to qualify for a reduced VAT rate. Both gas and electricity are taxed at the standard rate of 20%.
This can add up to more than just a pretty penny over time, especially for those with higher energy consumption. Despite efforts to reduce energy usage and promote renewable sources, the UK government has yet to introduce any measures to reduce the tax burden on gas and electricity, leaving many consumers burdened with high energy bills.
Chocolate-covered biscuits
In the eyes of UK tax regulations, not all biscuits are created equal. Regular biscuits are considered an essential item and are not taxed but those covered completely or even partially in chocolate are subject to a standard VAT rate of 20%.
While this may seem like a humorous tax law, it has led to some notable legal battles between businesses and HM Revenue and Customs (HMRC) over the years. One of the most famous cases to date is the Jaffa Cakes case in 1991, where the makers of Jaffa Cakes, argued that their product was a cake and should thus be subject to a zero-rated tax.
HMRC, on the other hand, argued that they were biscuits and should be taxed at the standard rate. Believe it or not, the bake-off went all the way to a tribunal, which ultimately ruled in favour of McVities.
Ice Cream
It seems that few sugary delights are exempt from taxation in the UK. This time around the culprit is ice cream. While many standard frozen foods are tax-free, ice cream falls into a different category, at least according to the UK government.
In the UK frozen foods that are intended to be cooked before being eaten are not subject to a standard value-added tax. However, there's a catch - for tax purposes, ice cream is not considered frozen food since it's designed to be eaten frozen, along with other treats such as frozen yogurt, ice lollies, and sorbets. This loophole allows the government to subject these goodies to a standard VAT of 20%.
Children’s car seats
Surprisingly enough, even children's car seats are subject to a reduced tax rate of 5% in the UK. It might seem strange that an item designed to protect our little ones during car journeys is taxed at all, but it's just one of many hidden taxes in the UK.
The reduced tax rate applies to safety seats, booster seats, booster cushions, and carrycots with restraint straps designed for kids up to 12 years old. While the redacted tax rate is essentially supposed to make these items more affordable for families, we can't help but ask - why is children’s safety even being taxed in the first place?
Crisps
While maize and corn-based snacks are not subject to tax in the UK, potato-based crisps are. Similar to the above cake debacle, this tax measure also managed to spark a high-profile court battle, this time led by the popular brand Pringles.
In 2008, the company set out to prove that their chips are only 42% potato and should thus be exempted from taxation. However, after a long and drawn-out legal battle, the court ruled that Pringles are indeed potato-based chips and are thus eligible for taxation at a standard rate.
Hot takeaways
Hot takeaway food is yet another item that is surprisingly subject to taxation. While cold takeaway is off the hook, hot takeaway food and beverages are fair game for standard taxation. This includes everything from hot sandwiches and pies to soups and stews.
De-shelled nuts
The final food on this increasingly long and unusual list of taxed items is de-shelled nuts. While shelled nuts are tax-exempt, de-shelled and salted ones are not. This peculiar tax policy has prompted many consumers to go in search of a loophole.
In this case, they found a mixed bag, literally. By buying a combination of shelled and de-shelled nuts, consumers can avoid paying the tax while still enjoying their favourite snack.
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