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!!  ;-) 

Comments
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Precisely the reason why....

Paul Scholes |
Paul Scholes's picture

.. 50% tax rate ...

Steve Holloway |
Steve Holloway's picture

Too much tax!

Adrian Pearson |
Adrian Pearson's picture

The top earners do pay an

yourobedientservant |

When was the last time

Mouse007 |

Mouse - 72.5 litres at £1.38p

yourobedientservant |

Let us not forget the verdict in Rex versus Puddle 1930

frustratedwithhmrc |
frustratedwithhmrc's picture

You mis-judge me perhaps ..

Steve Holloway |
Steve Holloway's picture

Politics of envy

yourobedientservant |

Believe me ... no envy intended!

Steve Holloway |
Steve Holloway's picture

Envy?

Paul Scholes |
Paul Scholes's picture

No - to answer the original question.

Chris Smail |
Chris Smail's picture

Cas flows

yourobedientservant |

Thanks for your concern ...

Steve Holloway |
Steve Holloway's picture

Client base

yourobedientservant |

One extreme

petersaxton |
petersaxton's picture

Scavengers

cfield |
cfield's picture

Public sector pensions, benefits for imigrants, cost of wars

DMGbus |
DMGbus's picture