Taxes you pay indirectly

How much does it raise?

It raised more than the year before, but the other taxes grew faster, so its share of the total fell.

How does it work?

A tax on a company is not paid by the company in any meaningful sense. A company is a legal arrangement; the money comes from somewhere. Economists call working out where it actually lands tax incidence, and it is one of the least settled questions in public finance.

There are three possible destinations. Customers pay through higher prices. Workers pay through lower wages than they would otherwise have had. Shareholders pay through lower returns, which includes anyone with a pension.

Corporation tax is the biggest. The evidence suggests a substantial share falls on workers over time, especially in open economies where capital can move, but estimates range from about a fifth to more than half and honest economists disagree.

Employer National Insurance is the clearest case. The OBR assumes most of it passes into lower wages within a few years, and the 2025 increase was explicitly analysed that way.

Business rates are a property tax on the occupier. Because the supply of commercial property is fairly fixed, much of the burden shows up in lower rents over time rather than higher prices, so landlords bear more of it than tenants.

The others are narrower. The Apprenticeship Levy funds training. The bank levy and surcharge apply to banks specifically. The Energy Profits Levy taxes North Sea oil and gas profits. The Digital Services Tax charges large digital businesses on UK revenues, and there is reasonable evidence that platforms passed it straight on to sellers as a fee.

How has it changed?

How it got here, and why each change was made:

• 1965Corporation tax is introduced as a separate tax on company profits.
• 1990Business rates are reformed into the national non-domestic rate, with the multiplier set centrally.
• 2011The bank levy is introduced after the financial crisis, charged on bank balance sheets.
• 2017The Apprenticeship Levy begins: 0.5% of payroll for large employers, refundable against training.
• 2020The Digital Services Tax begins at 2% of UK revenues for large search, social and marketplace businesses.
• 2022The Energy Profits Levy is introduced on North Sea oil and gas profits after prices spike.
• 2023Corporation tax rises from 19% to 25% for larger companies, the first rise since 1974.

Where does the money go?

Apprenticeship funding, in one case only. The Apprenticeship Levy is genuinely earmarked: employers draw it back down to fund training, and unspent funds expire. None of the others are. Corporation tax, business rates, the bank levy and the Energy Profits Levy all go into general taxation.

Because it is not earmarked, the only honest way to show what it pays for is by proportion. If taxes you pay indirectly receipts of £95.1bn were spent in the same proportions as all public spending in 2025-26, they would break down like this. It is an illustration of scale, not a statement about where those particular pounds went.

See for every £100 of tax for the full picture.

Does it change what people do?

The Digital Services Tax is the cleanest natural experiment. Several large platforms announced explicit fee increases for UK sellers within weeks of it taking effect, naming the tax as the reason. Close to full pass-through, visible in public pricing, which is rare.

When a tax rise stops raising money looks at the cases where the effect has been large enough to move the revenue.

How does that compare with other countries?

In 2024 the UK raised 3.5% of GDP this way: seventh of the 12 countries compared here.

The UK’s corporation tax rate is around the OECD average after the 2023 rise, having been well below it. Business rates, though, are among the highest property taxes on business in the developed world as a share of the economy.

What are the arguments?

Both columns are set out as their strongest case, not as a preferred answer and a strawman. See how this site handles contested questions.