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!! ;-)
- Tax on sale of shares 39 2
- Limited Company - Personal Bank Account 556 21
- Husband and Wife Holiday letting profit split 41 1
- late payroll registration 63 1
- Builder Gifted Deposit and capital gains 488 18
- *Urgent pls advise * filing dormant accounts to Companies House 451 18
- Paint Manufacturer Flat Rate Scheme 42 2
- Profit and Loss Account Adjustments 168 7
- Expenses paid by director (the owner) 246 4
- Breaking Up A Property Company 266 2
- Website development costs - tax and accounting treatment 226 3
- G'day IPA-IFA 520 8
- Declaration of Trust 570 20
- Inventory valuation of precious metals? 71 1
- Who can wind up a Promissory Trust? 94 2
- MAAT signing off ACCA PER? 330 2
- Amazon - digital book sales 202 1
- tax insider 334 4
- Auto-Enrolment 229 3
- Annual subs 187 2
- Skandia using wrong address 1,416
- Nil Rate Band Trust - index linked debt by way of charge over property 728
- Any views 662
- HMRC Employers Diary 494
- International interest certificate 410
- Stamp Duty on share for share exchange 370
- Sale of business 320
- NOVA 227
- IR35 & Managed Service Companies 226
- Advertising services? 221