Pick something you buy. The receipt takes the duty and VAT out of the price, then adds the income tax and National Insurance on the wages you earned to pay for it.
VAT is charged on top of duty, so it comes off the ticket price first: at 20%, one sixth of what you pay is VAT. Duty is worked out from what the item contains: litres of pure alcohol, litres of a sugary drink, cigarettes, litres of fuel or millilitres of vape liquid. What is left goes to the seller. The last step works out how much you had to earn, before income tax and employee National Insurance, to have the ticket price to spend. A student loan adds 9% of pay above the plan’s threshold (6% for a Postgraduate Loan). It appears on its own line because it repays a loan rather than paying a tax, and it stops once the balance is cleared or written off.
The taxes the seller pays are inside the price too: employer National Insurance, business rates, corporation tax and import tariffs. So is the 15% National Insurance your employer pays on your wages above £5,000 a year. Counting them would make the state’s share bigger than shown here. Small brewers and cider makers pay less alcohol duty under small producer relief, which the calculator ignores.
Chancellors from both main parties. A Labour Chancellor cut VAT to 15% in 2008, and the Coalition raised it to 20% in January 2011, where it has stayed. A Conservative Chancellor froze the income tax thresholds in 2021 and a Labour one extended the freeze to April 2031, so each pay rise pulls more people into the 28% and 42% rates (see The £56 Billion Stealth Tax). Alcohol duty rose with inflation in February 2026. Tobacco duty rose again on 1 October 2026, the day duty on vapes began.
Sources: HMRC, Alcohol Duty rates (from 1 February 2026); HMRC, Tobacco Duty rates (from 1 October 2026); HMRC, Vaping Products Duty (£2.20 per 10ml from 1 October 2026); HMRC, Soft Drinks Industry Levy (from 1 April 2026); DESNZ, weekly road fuel prices, with fuel duty as set out in The real cost of fuel; HMRC, Income Tax rates and allowances and National Insurance rates, 2026/27; HMRC, Rates and thresholds for employers 2026 to 2027 (student and postgraduate loan thresholds); The Morning Advertiser, average pint price, May 2026, as cited in The £5.34 Pint. Other prices are examples. Rates checked 5 October 2026; the Budget on 28 October may change them.