Taxation

Question 1

What is PAYE?

Answer 1

HMRCs system of collecting income tax and National Insurance from employees, being deducted from employee’s monthly salary before it reaches their banks.

Question 2

How is PAYE calculated?

Answer 2

Based on an employee’s salary and eligibility for personal allowance which is set by the government and states the amount an individual can earn tax-free each year.

Question 3

What are the 3 rates of VAT?

Answer 3

Standard rate at 20% - applied to most products and services.
Reduced rate at 5%
Zero rate VAT - certain animal feeding products, plants and seeds can qualify.

Question 4

What is payroll taxation?

Answer 4

Deducted by the business from employee’s wages based on yearly earnings.

Question 5

What is corporation tax?

Answer 5

Tax a company or association pays to HMRC based on annual profits.

Question 6

What are the governments aims for Making Tax Digital (MTD) ?

Answer 6

Governments plan to have a digitised tax system, which will make tax returns simpler and more efficient through digital software.