Tax Topic 5

What is the tax on business profits What is the tax on business profits? VAT, Corporation Tax, Capital Gains Tax When does the government set out its spending and tax policies? Budget, through the Bank of England, at an election If the government needs more money to finance spending what will it do to tax levels? Increase or decrease If people have to pay more tax, what will happen to people’s spending? Increase or decrease Which one of these is an indirect tax? Income tax, national insurance, VAT What VAT rate would you pay on the following (all different)? Gas, computer, children’s clothing Which of the following is a flat rate of tax and which is a variable rate tax? VAT, income tax Approximately how much is your personal allowance? £2,500 £5,000 £11,000 £41,000 Who sets the tax rates in the budget? Prime Minister, Governor of the Bank of England, Chancellor of the Exchequer Another term for the government’s main tax is ‘Pay As You Earn’ PAYE. Which tax is it? N.I. VAT Income tax, Corporation tax What tax do you have to pay when buying a house? N.I. VAT Stamp Duty Capital Gains tax What is social justice? Rich paying tax to help poorer people, people being sent to prison for fraud 5% 20% 0% Flat variable

Define the Key terms Annual Budget Capital gains tax Corporation tax Direct tax Excise duty Indirect tax Inequality of income Infrastructure –Inheritance Flat-rate tax Redistribution of income Social justice Stamp duty (or stamp duty land tax) Value added tax (VAT) Variable tax

Key terms Annual Budget – an outline, given by the Chancellor of the Exchequer, of planned government expenditure for the next financial year. Capital gains tax – a tax on the increase in value of an asset, such as land or shares. Corporation tax – a tax paid by businesses. Direct tax – tax that is taken directly from income or wealth. Excise duty – a tax levied on the manufacture or sale of specific goods, such as tobacco and alcohol. Indirect tax – tax that is charged on spending, or on goods and services (eg VAT in the UK). Inequality of income – a situation in which some people have much higher incomes than others. Infrastructure – the physical and organisational structures and facilities that are needed for a society to run properly. Inheritance tax – a tax levied on the value of property, or money, bequeathed after death or given as a gift. Flat-rate tax – tax that is the same proportion at all levels of income.

Redistribution of income – a government policy aiming to reduce inequalities of income by increasing lower incomes and / or reducing higher incomes in some way. Social justice – the ideal that people should have equal opportunities and equal access to resources. Stamp duty (or stamp duty land tax) – a tax paid when buying property or land. Value added tax (VAT) – a tax that is added to the price of goods and services. Variable tax – tax that varies in level depending on income, ie a greater proportion of tax is taken from higher incomes and a lower proportion from lower incomes.

What is the tax on business profits What is the tax on business profits? VAT, Corporation Tax, Capital Gains Tax When does the government set out its spending and tax policies? Budget, through the Bank of England, at an election If the government needs more money to finance spending what will it do to tax levels? Increase or decrease If people have to pay more tax, what will happen to people’s spending? Increase or decrease Which one of these is an indirect tax? Income tax, national insurance, VAT What VAT rate would you pay on the following (all different)? Gas, computer, children’s clothing Which of the following is a flat rate of tax and which is a variable rate tax? VAT, income tax Approximately how much is your personal allowance? £2,500 £5,000 £11,000 £41,000 Who sets the tax rates in the budget? Prime Minister, Governor of the Bank of England, Chancellor of the Exchequer Another term for the government’s main tax is ‘Pay As You Earn’ PAYE. Which tax is it? N.I. VAT Income tax, Corporation tax What tax do you have to pay when buying a house? N.I. VAT Stamp Duty Capital Gains tax What is social justice? Rich paying tax to help poorer people, people being sent to prison for fraud