Lesson 5 Flashcards
(38 cards)
What are the main objectives of learning about taxation in this session?
To discuss types of taxation for agricultural/land-based businesses, review specific applicable taxes, and understand different VAT levels.
Who manages taxation in the UK?
His Majesty’s Revenue and Customs (HMRC).
What are the consequences of tax evasion?
Investigations, fines, prosecution, and imprisonment.
What are the four main types of taxes?
Payroll taxes, Business taxes, Personal taxes, Sales taxes.
What is PAYE?
Pay As You Earn – tax deducted by employers from employees’ wages.
What are National Insurance Contributions (NICs)?
Payments made by employers and employees to fund state services like NHS, pensions, and benefits.
Who pays Corporation Tax and when?
Limited companies (Ltd and plc), based on net profits after expenses.
What is Capital Gains Tax?
Tax on profit from selling an asset (e.g. property, shares).
Why don’t sole traders pay corporation tax?
Their business income is not legally separate from their personal income.
Who pays self-employment tax?
Sole traders and partnerships
What must self-employed individuals do for taxes?
File a Self Assessment form and pay tax annually.
What can be deducted before tax by self-employed individuals?
Allowable business expenses.
What is the VAT registration threshold?
£85,000 in taxable turnover.
When must a business register for VAT?
If turnover exceeds £85,000 in 12 months or expected to in the next 30 days.
What are businesses required to do when VAT registered?
Charge VAT, submit VAT returns quarterly, record VAT on purchases/sales, pay net VAT to HMRC.
What are the three VAT rates in the UK?
Standard (20%), Reduced (5%), Zero (0%).
Give examples of items with the standard 20% VAT rate.
Office equipment, non-essential machinery, clothing, electronics.
What qualifies for reduced VAT (5%)?
Energy-saving equipment, building renovations, accessibility adaptations.
What items are zero-rated (0%)?
Basic foodstuffs, animal feed, children’s clothes.
What defines catering for VAT purposes (20%)?
Prepared food sold by restaurants, events, delivery, or private chefs.
What food is excluded from catering VAT?
Cold takeaway food, groceries, items needing customer prep.
Give examples of standard-rated food NOT in catering.
Ice cream, crisps, roasted nuts, some biscuits, hot beverages.
Give examples of zero-rated food NOT in catering.
Cakes, chocolate spread, milk, tea, coffee, cocoa, candied peel.
What basic food items are zero-rated?
Meat, poultry, exotic meats, culinary herbs, vegetables, pulses.
