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!! ;-)
- Increasing the personal allowance: A top priority? 467 18
- Double tax treaty Italy and UK 87 1
- Anyone Heard of This Outfit? 1,098 7
- Bereavment payment 62 1
- Can anyone advise on the best VAT Scheme to change to? 268 4
- Apologies for reposting this but first post was on Friday afternoon! 339 2
- CT600 Computations - Company Tax Return help 1,291 14
- Sage Bank Reconciliation 142 2
- Companies House incorporation service 342 12
- Factors affecting tax charge FRS 19 (marginal rate) 72 1
- P35 and Service Company questions 145 3
- VAT chargeable to conference attendees 191 6
- Is Accountancy Becoming like an Insurance Policy 198 1
- Long period of account for Corporation Tax 259 7
- Flat Rate VAT and EU sales (Non VAT) 139 3
- NIC £2000 Allowance - Care Support Worker 148 3
- VAT, vans, sole traders and business use. 1,598 12
- Share Capital 127 2
- Trading income or not? 191 1
- Charge HMRC 419 3
- Xtuple 547
- Qtac payroll for bureau 375
- Confused - Professional Association a Mutual trader, or not? 316
- Industrial & Provident Societies 313
- Why would HMRC offer to close an investigation by contract settlement 290
- CIS schemes 221
- Domain name sale and limited company 205
- Investment 185
- Director legal fees in loose connection to the company 184
- Italian friend wants to set up a UK company to reduce taxes 178