UK Tax System - Lecture 1 Flashcards Preview

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Flashcards in UK Tax System - Lecture 1 Deck (34)
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1
Q

What is a tax?

A

Compulsory levy imposed by government (or other tax raising body) on income, expenditure or capital assets from which the taxpayer receives nothing directly in return

2
Q

Tax system =

A

Collection of taxes in an economy

3
Q

Tax base =

A

Basis on which taxes are levied

4
Q

3 main bases in UK

A
  • Income
  • Consumption
  • Capital (Wealth)
5
Q

Direct tax

A

Levied directly on person intended to pay tax. Collected at source or by direct assessment

6
Q

Indirect tax

A

Borne by person other than who from tax is collected

7
Q

Unit

A

Levied by volume of what is being taxed (eg tobacco - weight)

8
Q

Ad Valorem

A

Levied on value tax base (eg income tax)

9
Q

Progressive

A

Tax represents increasing portion as value of tax basis rises

10
Q

Proportional

A

Tax represents constant portion of value of tax base

11
Q

Regressive

A

Tax represents declining portion as value of tax basis rises

12
Q

Marginal rate tax > average rate of tax

A

Progressive

13
Q

Marginal rate tax = average rate of tax

A

Proportional

14
Q

Marginal rate tax < average rate of tax

A

Regressive

15
Q

Income tax

A

Paid by individuals on taxable income for the tax year

16
Q

Corporation tax

A

Paid by UK resident companies on taxable total profit for company’s chargeable accounting period

17
Q

National insurance - individuals

A

Paid by individuals on earned income from employment/ self employment for tax year

18
Q

National insurance - employers

A

Paid by UK businesses in form of NIC for employees on income from employment of employees for tax year

19
Q

Capital Gains Tax

A

Paid by individuals on profits made on sale of certain assets (for investment purposes/ outside normal business) for tax year

20
Q

Inheritance tax

A

Arises where chargeable person makes transfer of value. Can be during person’s lifetime or on estate when die

21
Q

Value Added tax

A

Paid by individuals and companies on goods and services purchased in VAT accounting period (depends when become VAT registered)

22
Q

HMRC

A

Administration function for the collection of taxes

23
Q

Tax year runs

A

6th April - 5th April

24
Q

Financial year

A

1st April - 31st March

25
Q

Self assessment deadline

A

Return (within 12 months end CAP) and payment must be sent by 31/01/2019

26
Q

HMRC to calculate deadline

A

Submit return by later of:

  • 31/10/2018 or
  • 3 months after receipt notification from HMRC
27
Q

Compliance costs

A

Costs imposed on tax payer when they attempt to comply with taxes

28
Q

Careless mistake

A

Fail to take reasonable care (max 30% penalty)

29
Q

Deliberate mistake not concealed

A

But not concealed (max 70% penalty)

30
Q

Deliberate mistake concealed

A

Max 100% penalty

31
Q

Tax gap

A

Difference between tax actually collected and theoretical liability

32
Q

Tax burden

A

Degree to which tax affects the tax payer

33
Q

Incidence of tax

A

Who has to pay the tax and when it has to be paid

34
Q

Economically efficient

A

Doesn’t distort the economic and commercial decisions made by individuals