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Tax - Duty

What is Duty?
The Government imposes an indirect tax called Duty on some goods and services. Examples include:

  • Fuel Duty on petrol, diesel and LPG
  • Excise Duty on tobacco and alcohol
  • General Betting Duty on gambling

Who pays Duty?
Duty is charged when things are made or imported into this country but the cost of this tax is usually passed on to us when we buy things. Unlike tax on our income, most of us don’t give much thought to Duty because when we buy things we are only given an overall price rather than a breakdown of how much of the cost is tax and how much is other things. But a large chunk of the price paid for items such as cigarettes or alcohol is actually tax that goes straight to the Government.

How much Duty is charged?
Duty on the various goods and services is worked out in different ways and is quite complicated. On spirits, for example, it is calculated per litre of pure alcohol whereas cigarette duty is based on a percentage of the recommended retail price for cigarettes together with a charge per 1,000 cigarettes.

  • HM Revenue & Customs, which is the part of the Government responsible for collecting taxes, has detailed information about Duty on its website.
  • The Government announces changes to Duty during the Budget. This is a statement that the Government makes every year to explain how it is going to raise the money needed to run the country. For more information see our section on the Budget.
  • If you are travelling to or from a country outside the European Union, you don’t have to pay Duty or some other taxes on a certain amount of goods such as alcohol and cigarettes. You’ll find duty free shops at airports selling these goods at cheaper prices.

What does the money raised from Duty get spent on?
The money raised from Duty goes into a central pot along with money from other taxes. This gets divided up amongst all the public services that the Government needs to spend money on.

 

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