Are we a high taxed economy - where does all the money go?
In the glorious aftermath of the end of tax return season I have turned my attention to a calculation that has been burning away in the back of my mind for some time.
Sadly enough I've often wondered what level of profit would a company have to earn to allow an owner/shareholder to fill his car with petrol? - and - of that profit, how much does the Government take a the end of his transaction flow? - I have run the analysis - see below –
Mr Capone would be proud!! I do wonder where all the money goes?
Assumptions - 1. Individual is a 50% taxpayer and owns 100% of shares in his company, 2. Company at the marginal rate, 3. Diesel 72.5p, 4. split of VAT and fuuel duty is as per petrolprices.com.
Assume net income of company at £215, Corporation tax is £59, div to shareholder is then £156, IT by shareholder is £56, resultant £100 spent at pump is £42 fuel duty and £17 VAT leading to a net spend of £41.
So the company earned £215 and £41 is received by the retailer - £174 taken by Government - an effective rate of 81%!!
Yes I know it's the worst case and you may wish to pay salary in the CT marginal rate etc etc but you could of course expand to take account of the tax in the hands of the retailer, I had to stop somewhere and I tried to make it interesting!! ;-)
- Clogged Losses 258 5
- Flat rate Vat Scheme & Vat on wholesale production of Cakes and other deserts 258 11
- Going to need a tax, insolvency and legal specialist I think 188 2
- Goods Purchased for Rental 72 1
- Letting relief on property transferred to a spouse 243 9
- Buy to let and capitak gain 45 1
- ideas for a bonus scheme for accountants 638 10
- Charge for use of credit card - permitted 298 7
- New Built in oven - allowable as repair? 243 4
- Accounting for Bank Loyalty Rewards? 102 1
- General tax book with planning 228 5
- Anybody heard of Geniac, the new De Lorean? 167 3
- tax on apprenticeship income 191 1
- are receipts needed? 539 14
- Gift of property & improvements 151 3
- VAT Invoice 209 6
- VAT code for invoice from not VAT registered company 281 5
- Error in past Corporate tax return 379 6
- Limited Company - Personal Bank Account 3,277 69
- 2013/14 failure to submit end of year submission 315 11
- Nil Rate Band Trust - index linked debt by way of charge over property 904
- International interest certificate 515
- NOVA 369
- Have we escaped Gift with Reservation of Benfit & Pre-owned asset charges? - Gift after benefit 312
- Management expenses for investment company 270
- Bonus Bonds 263
- Entertainer withholding tax in Australia 178
- P11D benefit received by widow 153
- Insolvency and whistle blowing 146
- Filing past due corporation tax returns 145