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Day: 5 April 2010

Business: Royal Mail Postage Price Increase

Following on from my previous post about where my money goes, I thought it’ll be worth reminding people that tomorrow (Tuesday the 6th of April) Royal Mail* postage prices increase (* = Royal Mail is a “private company” wholly owned by the UK Government).

Rate New price Old price
1st Class Letter (up to 100g) 41p 39p
2nd Class Letter (up to 100g) 32p 30p
1st Class Large Letter (up to 100g) 66p 61p
2nd Class Large Letter (up to 100g) 51p 47p
1st Class Packet of 101-250g 172p 162p
2st Class Packet of 101-250g 151p 141p
1st Class Packet of 251-500g 224p 214p
2st Class Packet of 251-500g 195p 185p

If you are sending more than 1,000 letters on a single day, you can get a discount of 1.5% – if you are sending over 20,000 you get 5.5%. However, if you are sending around 100,000 letters in a batch and they are presorted then the cost is just 15.85p: but if you are sending that many letters you have an option not to use Royal Mail (you can use UKMail etc): however, the small business person and normal consumers don’t have that option and have to pay Royal Mail’s ever increasing prices.

Where does my money go? (or how much does the Government make from me)

I’ve done a breakdown on my income and expenditure and it’s scary how much of my money (39.72% or 39.72p per pound) is going directly to the Government in Taxes.

Here’s the full breakdown (in pence per pound) of where my money goes.

I’ve bolded the money which goes to one government department or another.

  • 26.01p Income Tax: yes, I’m a “higher rate” tax payer, but I am working in Central London so costs are higher: see rent!. Don’t forget, that to pay me my employer needs to collect money from their customers which they have to pay VAT on to the government along with business rates etc
  • 20.83p rent: don’t forget that the people I’m renting this house from will need to then pay income tax on this
  • 14.17p savings
  • 6.22p National Insurance
  • 4.17p food shopping
  • 3.69p takeouts/evening meals/other hot meals
  • 3.33p Personal pension contributions (as the pension I’m supposedly paying for through National Insurance will be minimal)
  • 3.15p lunches (ouch – I’ll have to reduce this!)
  • 2.54p Council Tax
  • 2.50p web hosting server rental
  • 2.40p Oyster (London Underground) Card
  • 2.06p Gas and electricity (the property we are living in is currently poorly insulated, but we are moving soon)
  • 1.77p on VAT including:
    • 0.72p (17.5%) on my mobile phone bill
    • 0.65p (17.5%) on takeouts/evening meals/other hot meals
    • 0.10p (5% VAT) on gas and electricity
    • 0.09p (17.5%) on Internet access
    • 0.06p (17.5%) on Sky television subscription
    • 0.06p (17.5%) on £20 worth of VATable shopping each month (mainly cat food)
    • 0.05p (17.5%) on clothing
    • 0.02p (5% VAT) on Insurance Premium on Car insurance
    • 0.01p (17.5%) on Car MOT
    • 0.01p (5% VAT) on Insurance Premium on Life Insurance
  • 0.60p Mobile phone bill
  • 0.50p Internet access
  • 0.43p Fuel tax and VAT on Fuel
  • 0.40p car insurance
  • 0.33p Sky TV subscription
  • 0.28p domain name registrations
  • 0.28p clothing
  • 0.27p Water bill
  • 0.24p Petrol costs (excludes fuel tax and VAT – see 0.43p above: yep, we pay nearly double the amount of the fuel in taxes here in the UK!)
  • 0.24p life insurance
  • 0.20p TV Licence
  • 0.17p Car Tax
  • 0.06p MOT
  • 0.04p Car breakdown cover

Yes, I’ve included the following as “government contributions” – but that’s because the money goes either directly to a government department (such as TfL) or goes to a subsidiary wholly owned by the government. It’s up to you if you want to include these figures in your own “breakdown”:
* 0.20p per pound TV Licence: Should go towards funding the BBC – but £1.01 of that goes towards “Digital Switchover” costs and that 5.2% of it goes towards collecting the licence fee – and the current Labour government has made mention that they want to use the money to fund other causes. I actually think the BBC does a quite good job (and an excellent job for news), but I do disagree with the way the licence fee is managed by the government (who sets amount the licence fee is charged at and then routes the money to the BBC which is wholly owned by the government…).
* 6.22p per pound National Insurance contributions: These are not, technically, a tax (you can recognise the taxes by the word “Tax”)- but you can’t get away from not paying it and the money goes into the general government pot – I’m actually ignoring the fact here that my employer, to employ me, has to pay the same again in Employers National Insurance contributions.
* 2.40p per pound Oyster Card: This money goes towards me travelling on the “good to really bad depending on the day/time” London Underground system. This money actually goes to Transport For London – which is a government department controlling transport across the London area. Yes, I know it falls under the remit of the Mayor of London – but note the .gov.uk part of TfL’s web address: .gov.uk domain names are only available for the government to register…

Assumptions made:
* Out of the 260 Monday-Friday days, we have 13 bank holidays and I take 20 days holiday – leaving 227 working days that I’ve got to travel each way on the ‘Tube and have lunch.
* I travel 4,500 miles per year (currently not possible due to a broken car – but it’s roughly what we managed last year) and petrol costs at the pump 114.9p per litre and I get 49mpg – giving me 417.87 litres of fuel used per year.