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!! ;-)
- Goods Purchased for Rental 421 17
- Valuation of business 277 5
- Taxfiler V's BTC 535 19
- CGT implications for gift of shares to connected person 139 7
- Dividend Payments 390 10
- I.d for vat registration 149 7
- Capital allowances anti-avoidance 107 4
- accounts & tax software for small accountancy firms 709 24
- builder's 'cost only' job 130 1
- Myfirmsapp 616 13
- Filing past due corporation tax returns 277 1
- Completing Self-Assessment for a Director of Owner Managed Business 167 3
- CIS Deductions 124 2
- SA302's anyone?? 2,675 40
- Accounting for VAT not yet paid in year end 160 3
- Loan to Partnership is s455 tax relevant? 480 17
- Legal Counsel PC costs 83 1
- High Income Child Benefit 157 2
- Fees for sale 374 6
- Incorporation - any tax advantage? 2,637 24
- Nil Rate Band Trust - index linked debt by way of charge over property 1,007
- International interest certificate 588
- Have we escaped Gift with Reservation of Benfit & Pre-owned asset charges? - Gift after benefit 510
- NOVA 470
- Bonus Bonds 355
- Insolvency and whistle blowing 330
- Transfer of funds into recently set up company 257
- Payment for Promotional Samples 226
- TPR imposes first penalty notice fines 222
- Quickbooks 2015 150