Theme B: Direct And Indirect Tax Flashcards
What are direct and indirect taxes?
Direct and indirect taxes are used by the central government to raise funds for public services such as education, the National Health Service, and defence.
What is direct taxation?
Direct taxation describes taxes paid by a person or organisation that cannot be passed to anyone else or ignored.
What is income tax?
Income tax is a tax on your wages when you earn above a certain amount.
What is inheritance tax?
Inheritance tax is a tax on money left to you in a will when someone has died.
What is corporation tax?
Corporation tax is a percentage tax based on the profits a business makes.
What are National Insurance contributions?
National Insurance contributions are a form of taxation based on income, originally to fund the welfare state. Contributions made when working now fund state pensions.
What is council tax?
Council tax is a tax paid annually based on the value of the property that you live in, collected by the local authority.
What are indirect taxes?
Indirect taxation describes taxes paid on goods and services.
What is VAT?
VAT (value added tax) is a tax on most things you buy in the UK, currently charged at a rate of 20% on most goods and services.
Some items are VAT free, for example, children’s clothes.
What are excise duties?
Excise duties are taxes levied on items such as alcohol or tobacco.
What are the advantages of indirect taxes?
Indirect taxes are cheaper to collect, penalise spending rather than success, and can discourage spending on items harmful to health.
What is the total predicted government revenue from taxation for the financial year 2018-2019?
Around £769 billion
How much is raised from income tax?
£185 billion
What is the amount collected from VAT?
£145 billion
What are the receipts from National Insurance contributions?
£134 billion
How much is collected from corporation tax?
£55 billion
What is the revenue from excise duties?
£49 billion
What is the amount raised from council tax?
£34 billion
How much is collected from business rates?
£30 billion
What is the revenue from other taxes?
£86 billion
What is the revenue from other non-taxes?
£51 billion
What is HMRC?
Her Majesty’s Revenue and Customs (HMRC) is a non-ministerial governmental department responsible for the collection of taxation, payment of state support, administration of regulations, and investigating smuggling, fraud, and tax evasion.
What is one example of a direct tax in the UK?
Income Tax
True or False: Corporation Tax is a direct tax in the UK.
True
