Lesson One Flashcards
what is VAT ?
Indirect tax on customers spending
charged on most goods and services in uk
collected by business on behalf of HMRC.
What is tax ?
Public services,such as schools, hospitals ,roads and bin man are funded by taxation.
what is taxation?
Taxation is something that the government does, so they take money from the people whom it governs.
What is council tax?
Direct tax because its going to a particular individual or household.
who pays council tax? and how much?Then where will it go ?
People who live in a flat, house or mansion and the amount depends on property worth.Then it will go to Public services.
What is council tax called for businesses?
Business rates
What is corporation tax?
Taxing businesses on their profit.
What is sales tax or VAT?
Adding tax to the price of goods sold by the business.
What does VAT stand for?
Value added tax
What month is the end of the tax year ?
April
What is indirect tax? and give an example?
When tax is collected and paid to the government by a third party e.g sales tax aka vat
What benefit does a company get from having vat charged on their products or services?
They can reclaim any VAT charged.
What is Input tax?
It is purchases tax.
What is output tax?
It is sales tax.
What is standard rate for VAT?
20%
What is income tax?
Taxing income on earnings,saving and property. When you earn income tax will be taken from your earnings.
What is reduced rate for VAT?
5%
What is zero rated for VAT?
0%
What are examples of reduced items?
Domestic fuel like gas and electric sold to private homes and children car seat.
What are examples of zero rated items?
Children clothes, Motor cycle helmets, most food stuff and printed books and newspapers.
What are examples of exempt items?
Education, Vocational training , healthcare , loan , finance , funerals , postage and lottery tickets.
What is the difference between zero rated and exempt?
zero rated is subject to vat but exempt are not and zero rated you can reclaim vat and exempt you cant.
What vat can a business reclaim vat on if they have both exempt and rated items?
They can only reclaim on the rated items they sell.
Give an example of goods outside the scope of VAT?
Congestion charge and sale you make off an hobbie.
What is staple?and give example?
Dont have to pay vat on it.e.g. Basic biscuits like digestives
What is luxury?give an example?
20% tax on it e.g. sweet , choc and crisp.
Can you charge vat on customers if not registered with HMRC?
No you must be registered or have the intention to be registered when turnover exceeds.
What is the VAT threshold amount ?
85k
If you reach threshold do you have to register?
Yes, you must.
What is a club or association that charges annual membership or a charity that trades as part of fundraising classed as?
Business for VAT purpose.
