Introduction to UK Tax System (Essential Reading)

Question 1

What does government taxation represent?

Answer 1

A withdrawal from UK economy while its expenditure acts as an injection into it

Question 2

What does government’s net position affect?

Answer 2

Economic activity within the UK

Question 3

What does government favour?

Answer 3

Longer-term planning, and regularly sets out proposed plans for expenditure

Question 4

What do changing demand levels have?

Answer 4

An impact on employment levels within different sectors and profitability of private sectors

Question 5

What does government use to control activity?

Answer 5

Uses tax policies

Question 6

What does government encourage (saving)

Answer 6

Saving on the part of the individual

Question 7

What does government encourage (donations)

Answer 7

Donations to charities through Gift Aid scheme

Question 8

What does government encourage (entrepreneurs)

Answer 8

Entrepreneurs who build their own business

Question 9

What does government encourage (investment)

Answer 9

Investment in plant and machinery through transferable personal allowance

Question 10

What does government encourage (marriage)

Answer 10

Marriage and civil partnerships through transferable personal allowance

Question 11

What does government discourage?

Answer 11

Smoking and alcoholic drinks

Motoring through fuel duties

Question 12

Potential issue with free market?

Answer 12

Rich getting richer and the poor poorer

Question 13

What is key argument for capital gains tax and inheritance tax?

Answer 13

To redistribute income and wealth away from the rich and more to the poor

Question 14

What are direct taxes?

Answer 14

Income tax
Capital gains tax
Inheritance tax

Question 15

When are direct taxes implemented?

Answer 15

For those who have these resources

Question 16

When are indirect taxes implemented?

Answer 16

To disourage spending and encourage saving

Question 17

When are progressive taxes implemented?

Answer 17

Target those who can afford to pay

Question 18

What do taxes on capital or wealth ensure?

Answer 18

Ensure that people can’t avoid taxation by having an income of zero and just living off the sale of capital assets

Question 19

Examples of environmental factors in taxation?

Answer 19

Climate change levy

Landfill tax levied

Changes to rules on the lease or purchase of cars, and taxation of cars and private fuel provided for employees

Question 20

What is climate change levy?

Answer 20

Raised on businesses in proportion to their consumption of energy

Question 21

What does landfill tax encourage?

Answer 21

Recycling by taxing waste which has to be stored

Question 22

Purpose of changes to rules on the lease or purchase of cars, and taxation of cars and private fuel provided for employees?

Answer 22

Encourage the manufacture and purchase of low CO2 emission cars to reduce emissions into atmosphere caused by driving