Issue 291
CLH DIGITAL
7
HMRC Receipts on “Sin Taxes” Continue to Fall – Now Just 2.8% of Total Tax Revenues
HMRC’s takings from ‘sin taxes’ have fallen by 35% over the past decade to £24.2bn or 2.8% of its total revenues in 2024/25, versus 4.3% in 2015/16, according to research from UHY Hacker Young, the national accountancy firm.
The firm warns new ‘sin taxes’ could likewise be introduced, along the same lines as the 2019 Soft Drinks Industry Levy and the Plastic Packaging Tax in 2022. These newer taxes raised only £580m last year — 1% of total receipts and down from £608m the year before — which UHY Hacker Young warns it could prompt the Government to increase them further. A new packing recycling levy has also just been introduced.
The decline in receipts from sin taxes reflect a long-term shift in consumption, UHY Hacker Young says, with consumers reducing their spending on tobacco and alcohol partly in response to repeated tax increases and rising prices. According to UHY Hacker Young, falling takings from sin taxes could prompt the Government to increase existing rates or even introduce new levies, as it seeks to close its budget gap.
Simmonds says: “The Government may seek to include new taxes on products it deems ‘unhealthy’ or ‘polluting’, but it could also raise existing taxes on sugary drinks and plastic packaging. Given how little revenue they bring in, the Government may feel there’s still room to push them up.”
James Simmonds, Tax Partner at UHY Hacker Young, says: “Traditional sin taxes now collect a small and shrinking slice of the pie for Government coffers, a gap that Rachel Reeves may look to fill with further rises.”
UHY Hacker Young says that the large number of new taxes and their complex structures is already making it harder to do business in the UK and that extra “sin taxes” would add to this.
UHY Hacker Young says the gambling industry may be a key target for potential tax rises, given the taxes it paid increased 7% to £3.6bn in the last year, up from £3.4bn. Senior politicians, including former Prime Minister Gordon Brown**, have already called for higher taxes on the sector.
Taxes from ‘sin taxes’ have fallen 35% over the past decade – percentage of overall tax revenues that are sin taxes
Simmonds says: “It has been widely rumoured that bigger taxes will come, especially those aimed at the gambling industry, which some politicians argue have been undertaxed.”
“The sheer number of different taxes — many with complex, sliding structures — harms business confidence. How are companies supposed to know which products will be added to the blacklist next?” Simmonds says.
Of the £14 cost of a pack of cigarettes, £11 is tax and just £3 covers the product itself, while a litre of alcohol over 22% ABV carries £32.69 in duty. Taxes on gambling can reach up to 50% of marginal revenue, with companies having to pay Corporation Tax on the remaining profit.
Coconut Tree Restaurant Group Rescued from Administration, Safeguarding Over 150 Jobs A rescue deal has been completed for The Coconut Tree restaurant group, with the business acquired from administration by MPS Hospitality Limited, an entity associated with two of the company’s original founders. The transaction encompasses the full estate of seven Sri Lankan dining establishments operated under The Coconut Tree brand, with locations spanning Bristol, Bath, Oxford, Reading and Cheltenham. The acquisition preserves employment for more than 150 staff members across the portfolio.
consumer spending patterns and broader economic pressures that have impacted trading performance. “We are satisfied to have delivered a constructive resolution for both the workforce and creditors of The Coconut Tree,” Mr Boughey stated. He emphasised that the transaction with MPS Hospitality Limited ensures job security for the staff complement while the administrators worked to achieve optimal returns for creditor groups.
The group’s entry into administration was confirmed on 6 November, with insolvency practitioners Mark Corporate records indicate that MPS Hospitality Limited is under the direction of Shamil Tiranjan Boughey and Rebecca Dacre of Forvis Mazars appointed to manage proceedings. The administration followed Fernando and Praveen Cliford Demitrius Fernando Thangiah. The pair were among the five co-founders who difficulties stemming from a failed Company Voluntary Arrangement (CVA) during the summer months, established The Coconut Tree in 2016, alongside Mithra Fernando, Rashintha Rodrigo and Dhanushka which had placed the business at risk of liquidation. Fernando. Commenting on the completion of the sale, Mr Boughey highlighted the challenging operating environment facing the sector. He noted that restaurant operators are contending with elevated operational costs, shifting
The rescue represents the latest example of hospitality businesses seeking restructuring solutions amid an increasingly difficult trading climate for the casual dining sector.