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!! ;-)
- Personal Pension Relief in the Tax Code 128 2
- Auto enrolment confusion 2,040 47
- CGT on lost shares/scam 368 4
- Setting up a practice 373 5
- Very large share capital by mistake 490 7
- VAT refund if only output tax on first claim 448 4
- 24 month rule and expenses 262 1
- Love is in the air 532 6
- HP agreement in Directors name but payments under company 653 17
- Stamp Duty 294 4
- Physiotherapist and vat and agency work ( one for Les Howard???) 238 4
- I am 34 years old, am I too old to start a career in Accounting ? which is the best way to pursue it 1,805 21
- Another Sneaky Tax Hike! 584 5
- Incorporation of gp practise 261 1
- Sage Instant Accounts Complete De-install problem 262 9
- Client Paperwork Retention? 573 13
- Paid staff their normal salary instead of SMP 582 7
- Tax Overlap Reporting 384 4
- Pay rise - how to enter in Moneysoft 395 9
- Reimbursing director travel costs 455 6
- DTA tie-breaker issue 301
- Tax Implicatins on a Directors Loan 290
- CGT for NOn UK residents 280
- Employer's pension contribution - need to be PAYE registered? 276
- What are the tax implications of overseas sales through a UK based company? 254
- profit or loss on furnishings and deed of trust 240
- Apprenticeship Levy 237
- Tenants in Common - Actual % split not written down 225
- Capital Gains personal representatives 221
- Discretionary payment to sick employee 211