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RAF MILDENHALL — For U.S. servicemembers in the United Kingdom, the English tax system can mean that owning a TV, driving a car or buying some fish and chips comes with a government fee. With the pound worth almost twice as much as the dollar, the taxes take a heavier toll than in other European countries where Americans serve. In Germany, for instance, the sales and services tax is lower, the euro is weaker and Americans are exempt from most other German taxes.

For those navigating the British system the costs can seem relentless — road tax, council tax, value-added tax, TV tax. Newcomers, especially, may find the system confusing.

Here’s a breakdown of the taxes U.S. servicemembers and civilians face in the United Kingdom.

Value-added taxThe most ubiquitous tax in Britain, the value-added tax, or VAT, is a 17.5 percent tax on almost everything bought with the British pound, from cars to restaurant meals to movie tickets. There are some major exceptions, including bus, plane and train tickets and food bought in supermarkets, said Jan Marszewski, a spokesman for Her Majesty’s Revenue and Customs.

Under certain circumstances, however, Americans can avoid the VAT, said Felicia Thompson from the RAF Lakenheath VAT exemption office. To qualify, a purchase must be for more than 100 pounds and bought from a business willing to accept exemption forms. American buyers then start the process by bringing an invoice to the VAT office with English cash or bank draft in hand for the purchase price, then return later to get the official check to pay the vendor, Thompson said. Buyers must then bring the business receipt back to the VAT office, Thompson said.

It’s a lot of legwork but can save people serious cash. In 2005, the Lakenheath office processed just under $350,000 in tax exemptions.

Capt. Pat Grolemund of the 48th Civil Engineering Squadron said he has seen both sides of the VAT. Though he coughed up more than 600 pounds in taxes on a motorcycle — which, like homes and cars, is not exempt — he saved more than 300 pounds in tax on furniture purchases, he said.

“If I had to pay that myself, I would have cried a little bit,” Grolemund said.

TV license feeFor most Americans, the idea of a tax on TV seems a bit absurd. In the States, basic television is free via antenna. Programming is funded through advertising.

Staff Sgt. Bradley Steffens said he was unaware of the U.K. license fee until he got a letter reminding him to pay or suffer a steep fine.

“At least they were nice about it and sent a letter first,” Steffens said.

In England, the government avoids classifying the fee paid to watch TV as a tax, labeling it a license instead, said Elizabeth Jay, spokeswoman for the TV Licensing office.

However it’s classified, the rate jumped on April 1 to 131.50 pounds for a year of color television. The price drops to 42 pounds for a black-and-white TV. People older than 75 are exempt, and the blind receive a 50 percent reduction, according to the TV Licensing Web site.

The money is used to fund the British Broadcasting Corp.’s 10 radio stations, eight TV channels and its Web site,

“This allows it [the BBC] to run a wide range of popular public services for everyone, free of adverts and independent of advertisers, shareholders or political interests,” according to the licensing Web site.

Last year, the TV License funded the BBC to the tune of 2.9 billion pounds.

Road taxU.K. gas costs at least four times as much as gas does in the States, due mainly to taxes.

Add to that the annual emissions-based test required by the Ministry of Transport, or MOT, and the high cost of obtaining a driver’s license — 105 pounds ($185) for test and license — and becoming a motorist in England can be a costly endeavor.

The amount paid in road tax depends on how much carbon dioxide the car emits, according to Driver and Vehicle Licensing Agency spokesman David Whitbread. Generally, the larger and heavier the vehicle, the more it emits. Older cars also tend to emit more than newer models.

The government divides the fee between seven classes, ranging from no payment for a vehicle that emits less than 100 grams of carbon dioxide for every kilometer driven to up to 210 pounds ($386) for a car that emits 225 grams per kilometer. Hybrid and low emissions vehicles get a discount.

Road taxes are not allocated directly to road projects, however, Whitbread said. They are instead funneled to the United Kingdom’s general treasury.

Council TaxIn the U.S., homeowners normally pay a property tax to subsidize local services such as schools, police, fire departments and trash pickup. Renters don’t pay, though homeowners likely figure these taxes into the rent.

In the United Kingdom, the occupant of a property — whether it be owner or renter — is responsible for the Council Tax, which provides the funds to pay for local services.

However, the Status of Forces Agreement between the United Kingdom and the U.S. exempts American servicemembers from paying the local Council Tax on their principal dwelling, according to a 48th Fighter Wing spokesman.

Steffens, already hit with the TV license and road tax, said he appreciated the military being exempt from the costly Council Tax.

“I think it’s good we don’t pay Council Tax,” Steffens said. “I think it’s the only thing we get for free, our trash being taken out.”

Stamp dutyThough it sounds like a charge on royal mail, it is actually a property tax. For a home that costs between 125,000 pounds and 249,999 pounds, the tax is 1 percent of the purchase price, said Paul Fleckney, office manager at the Mildenhall real estate firm Elvin Estates. At 250,000 pounds, it jumps to 3 percent, then to 4 percent at 500,000 pounds, he said.

Even for airmen who receive a housing allowance whether they rent or buy, the taxes take a big bite because they have to pay the duty up front — housing allowances don’t cover it.

A little reliefThe SOFA does provide U.S. servicemembers and civilians some relief. They are exempt from taxes based on residence in the United Kingdom, such as income tax and capital gains tax, according to the 48th Fighter Wing.

But it is best to check with a tax professional to ensure any exemptions. Those who fail to pay may face steep fines.


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