Taxation Flashcards
Revenues
Money coming in (it is not guaranteed)
Direct Taxes
Paid directly to the government • Income tax • Inheritance tax • National Insurance contributions (Health Service) • Capital gains tax (Business) • Corporation tax
4 Indirect taxes
1) VAT
2) Stamp duty
3) Excise duty
4) Council tax
VAT
Value Added Tax
Paid or many goods at services at 20% of the price
Stamp duty
A tax paid on the purchase of property
* Low stamp duty can encourage people to buy houses
Excise duty
An extra tax placed on items like fuel, alcohol and tobacco
Council tax
A local tax raised by the Local Council based on the value of your property which helps to pay for
Why taxation?
1) Paying for government expenditure
2) Managing the economy
3) Changing behaviour - Discourage smoking by raising the excise duty on tobacco & alcohol
Income tax
A tax on money people receive from their earnings, savings, pensions and benefits. People who earn more pay more tax
National Insurance Contributions
A tax based on person’s weekly income that is used to pay for benefits, state pensions
The amount you pay in National Insurance Contributions depends on:
1) How much you earn
2) Whether you’re employed or self-employed
Who pay National Insurance Contributions
Anyone that’s 16 and over and working in a job or working for yourself (self-employed)
You start paying NICs once your earning reach a certain level
£12 a week
Corporation tax
Tax on company profits
• Small companies with profits of less than £300,000 pay 21%
Inheritance tax
A tax on the value of the money, property or possession that someone leaves when they die unless the estate is being passed to husband/wife or civil partner.
Capital Gain tax (Business)
A tax on profits from investments such as stocks and shares