Principles Of Taxation Flashcards
(26 cards)
What are taxes?
Mandatory contributions levied on individuals or businesses by a government entity.
What do tax revenues finance?
Government activities, including public works and services such as roads, schools, education, Social Security, NHS, and other social investments.
Who bears the burden of taxes in economics?
Whoever pays the burden of the tax, whether the entity being taxed or the end consumers.
What are some types of taxes to consider from an accounting perspective?
- Payroll taxes
- Income taxes
- VAT
- Corporation tax
What is VAT?
Value Added Tax, a tax on goods and services.
What type of tax is Corporation Tax?
A tax on business profits of Limited Companies and PLCs.
What is Capital Gains Tax (CGT)?
Tax on the profit made from the sale of assets, such as share investments.
What is Income Tax?
A tax on income for both employed and self-employed individuals.
What are the main direct taxes in the UK for individuals?
- Income tax
- National Insurance contributions (NI)
How are taxes collected from employees?
Through a system known as PAYE (Pay As You Earn).
What is RTI?
Real Time Information, a digital system for submitting payroll information to HMRC.
What is the Personal Tax Allowance in the UK?
£12,570, also known as free pay.
What is the income tax rate for income up to £37,700?
20% tax.
What is the income tax rate for income above £150,001?
45% tax.
What are the National Insurance rates for employed individuals up to £37,700?
8% NI.
What is the Class 2 National Insurance for self-employed individuals?
£3.45 per week.
When must tax returns be submitted to HMRC?
By 31st January each year.
What happens to tax returns from April 2026?
All tax returns will have to be digitally submitted four times per year.
What happens if income tax rates are higher?
Individuals will have less money to spend, reducing demand for goods and services.
What is the corporation tax rate for profits up to £50,000?
19%.
What is the corporation tax rate for profits above £250,000?
25%.
What is the marginal corporation tax rate for profits between £50,001 and £299,999?
26.5%.
What must be submitted to HMRC for corporation tax?
Tax return, accounts, and corporation tax calculation.
When must corporation tax be paid to HMRC?
By 9 months and 1 day after the accounting period end date.
