Introduction to Tax Flashcards
What good behaviours do the government encourage?
Savings - tax relief on pension
Donations to charity - gift aid
Investment into business - enterprise investment scheme
Entrepreneurs who build their own businesses - capital tax relief
What bad behaviours do the government discourage?
Smoking and alcoholic drinks - heavily taxed
Motoring - taxed on multiple aspects
What is a direct tax?
Direct tax - only paid by those who generate the funds to pay the tax.
E.g. Income tax
What is an indirect tax?
Indirect tax - relates to consumption and it’s up to individuals whether they spend money on such goods.
E.g. VAT
What is a progressive tax?
Tax that rises as a proportion of income as that income rises
What is a regressive tax?
Tax that rises as a proportion of income as income falls
What is a unit tax?
Tax that’s calculated as a flat rate per item, regardless of value.
What is a value tax?
Tax based on a % of the value of the item
What is income tax?
Tax on income
What are capital taxes?
Arise when capital assets are disposed of
What are taxes on motor vehicles based on?
Carbon emissions
What taxes are individuals liable to?
Income tax (IT)
CGT
NICs
VAT
When does the tax year run?
6th April to 5th April
What is a partnership?
A group of people carrying out business together with a view to making a profit
Each partner is liable to tax on their share of income and gains of the partnership
What taxes are companies liable to?
Corporation tax (CT)
IT of employees deducted under PAYE
NICs
VAT
