Types of Taxation

Question 1

Payroll Taxation

Answer 1

Is deducted by the business from employee’s wages and is based on what they earn each year.

Question 2

Corporation tax?

Answer 2

Is levied on profits from conducting business and applies to:
- a limited company
- an foreign company with a UK branch or office
- A club, co-operative or other unincorporated association

Question 4

What are the taxable profits for corporation tax?

Answer 4

include the money a business or association makes from:
- Doing business.
- Investments.
- Selling assets for more than they cost (know as ‘chargeable gains’).

Question 5

Self-Assessment

Answer 5

If someone is self-employed or earns money from capital gains or dividends, they need to register with HMRC to complete a self-assessment tax return. They needs to be submitted to HMRC every year.

Question 6

Profit margis meaning?

Answer 6

financial ratio that measures the percentage of proft earned by a company in relation to its sales revenue

Question 7

Capital Gains meaning?

Answer 7

The increase in the value of a capital asset

Question 8

Dividends meaning?

Answer 8

how companies distribute their earnings to sharholders; when a company pays dividend, each share of stock of the company an individual owns entitles them to a set dividend payment.

Question 9

What is PAYE?

Answer 9

Pay as you Earn

HMCR’s system of collecting income tax and national insurance from employee’s monthly salary before they recieve it too their bank account.

Question 10

How is PAYE calculated?

Answer 10

based on the employee’s salary and whether they are eligible for the personal allowance.

Question 11

What is personal allowance based on PAYE?

Answer 11

is set by the government and refers to the amount an individual is able to earn tax-free each year; the rate of taxation and personal allowance can change from year to year.

Question 12

What is VAT

Answer 12

Vat is a tax that is added to most products nd services sold by VAT-registered businesses. Businesses have to register for VAT with HMRC iftheir VAT taxable turnover is more than £85,000. Businesses can also choose whether to register if their turnover is less than £85,000.

Question 13

What are the three different types of VAT?

Answer 13

• Zero Rate
• 5% (reduced rate)
• 20% (standard)

Question 14

What are some examples of the products and services that have zero rate of VAT?

Answer 14

• Books and Newspaper
• Children’s clothes and shoes
• Most foods

Question 15

What are some examples of the items that have standard rate of VAT?

Answer 15

• catering,
• alcoholic drinks,
• confectionery,
• crisps and savoury snacks,
• hot food
• Restaurants