I tried to read the terms within PayPal, but I think i am lost already, what does it meant by Withdraw fee and Return fee ?
I know I can sent and receive funds for free, so this means if I need to take funds out of the paypal account to my normal bank account, it will be charge £1 per transaction ? But the 16% Return fee sounds a bit steep, whatever that is, any help would be grateful

I'm going to move this to Consumer's Opinion for you.
However, the withdraw fee is when you take money from your paypal account. When someone pays you money to your account that is when you are charged the per transaction fee. I'm guessing but I believe that the return fee is if you or someone else defaults on the payment amount. IE, overdrawing your checking account.

withdrawing fee to your bank account now on paypal in the uk is 50pence for less than £50 and free for over £50, not sure how much paypal charges for you to deposit funds from your bank account into your paypal account, extortionate prices I say

to take money from your pay pal account and deposit into your checking account its free. they do charge a fee to depoist it into other accounts though. they charge a fee to receive funds from another person too. its a bit steep, but makes selling items quicker. just watch what people write in the subject line. pay pal is fast to freeze your account. i know, its happened to me. it took 6 weeks to get my account active again.