New Research: The £5.1 billion tax on Christmas

With money scarce and jobs under threat, most families will be watching the pennies this Christmas. But, while VAT rates have been cut, the taxman will still demand a hefty share, with virtually all Christmas purchases, from iPhones to crackers, subject to VAT, and granny’s sherry attracting excise duty on top. Not forgetting the fuel tax levied on journeys to see family and friends. The full report can be found here.


New calculations by the TaxPayers' Alliance show that despite family belt-tightening, the Christmas tax bill is still very large:

    • This Christmas, British families will pay an average £204 tax on their festive spending, equal to 500 Tesco Finest mince pies as well as 5 1-litre bottles of Harvey’s Bristol Cream sherry.  The Christmas Tax per family is down from £225 last year as a result of the cut in VAT and households planning to spend less.


    • The total Christmas tax bill will come to £5.1 billion, down from £5.65 billion last year.


    • The tax on Christmas is made up of:

VAT on Christmas goods and services = £3.7 billion
Alcohol duty on Christmas drinks = £1.3 billion
Fuel duty on people travelling to see family and friends = £141 million


Mike Denham, former Treasury economist and author of the report, said:


"Despite the VAT cut, the taxman is still charging people a hefty bill on the season of good will. Santa is lucky they haven't taxed his sleigh yet. With the recession making life harder than ever for families, Gordon Brown should stop helping himself to so much from our Christmas stockings."

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