Business Taxation
II) A sole trader may claim capital allowance on a vehicle. Where the
car is used partly for private purposes by the sole trader, all
calculations are made using the full cost of the vehicle for there
income tax computation, but they can claim capital allowance for the
business use proportion of the car.
The capital allowance system is a standardised method of depreciation
for tax purposes, available on certain items of capital expenditure.
Capital allowance is treated as a trading expense and is deducted from
schedule DI profits.
For sole traders the price of the car is taken into account as to how
much allowance is available. If the car is expensive (above £12,000)
it is dealt with on a separate basis and is capped with a £3000
allowance per annum. But once under the £12,000 limit it is dealt with
in the general pool and is allowed and allowance of 25% on its written
down value (WDV) per annum. But as mentioned before only the business
use of the car is taken into account therefore the capital allowance
is reduced by the percentage of use for business purposes.
Directors of companies are dealt with in a different way as they are
seen as an employee, the vehicle is owned by the company itself. An
employee is entitled to the capital allowance in full on assets used
partly for private use. But it is then assessed on a benefit in kind
in schedule E. This form of benefit in kind used to be a simple
calculation as to the number of business miles driven in the year and
was discounted according to the age of the car. Bust this system has
been replaced by a different system, whereby they take into account
the value of the car, their monetary contribution to the car and
whether the car is petrol, gas or diesel.
But in using these calculations and using the capital allowance
method, the amount of tax relief they gain is not much different, but
in the sense of ownership of the car whereby the sole trader owns the
The government of the United Kingdom, likewise the government of many other countries, raises money to spend on public services towards the tax system. The taxes are raised by two different levels of government, the HMRC, Her Majesty’s Revenue and Customs, and the local governments, as Barnet, Islington, Camden, Haringey, among others twenty nine local authorities in London, for instance. While the HMRC deduces taxes through Income tax, National Insurance contributions, VAT, corporation tax and fuel duty, local governments are responsible for business rates, council tax and other fees, such as on-street parking. In turn, the money deducted for tax purposes are applied to improve the health, education, social services and social security system. There are different types of taxes for different circumstances, for example, you have to earn above a certain limit to qualify for income tax and if you are self-employed you may be entitled to claim back much of your VAT (BBC, 2009).
cars than they do on anything else except for shelter. A reliable car that has been paid for in full may
However, this calculation is incomplete because the company needs to take on debt to finance the purchase of the car. These payments add an additional expense and cash outflow but purchasing still remains a more attractive option. The cost of the lease is still greater than the cost of debt.
to be processed. If you carry out a survey to count the number of cars
For years, the United States government has been trying to find a way to lower the obesity in the country. However, the approach it is using, i.e. taxing unhealthy food, is not the most effective one. People are going to purchase whatever products they wish, whether the price is increased a few cents or not. Junk food options are already set at a more reasonable price than healthy foods, enticing people to buy these less expensive goods. Even though putting a tax on other products, such as tobacco, has served the intended purpose, food is a necessity humans must have for survival. Society is used to consuming foods they want, and will continue to do so. Putting a tax on unhealthy food will not necessarily lower the obesity rate because there are other factors that contribute to this problem. Moreover, taxing measures are usually intended for the collective benefit of society rather than the individual. They are usually perceived as another way the government uses to take money out of the citizens’ pockets. Ultimately, thinking that higher taxes on unhealthy foods will help curb down the obesity rate in the country would be similar to say that cost is the sole contributing factor to this public health problem. Imposing taxes will not help lower the consumption level because these foods will still have lower prices than healthier choices. Taxes do not impact the nutritional value of foods, and their only predictable effect is to help in generating additional revenue for the government.
For each generation that grows up in America, there is always one thing that they all share, taxes. Individuals pay taxes on almost everything these days. Taxes are charged on purchases of food, goods, and even services. Taxes are also taken out of payroll checks each pay period and deposited into government accounts for use later. And lastly, at the beginning of the year when income tax is due, if an individual has done what is necessary, they will end up with a refund. If not, they can end up with a high tax repayment bill that leaves them wondering what went wrong. What if, however, there was a way to change the Nation’s taxation system? Would it be worth it to an individual to pay more for items instead of paying taxes at the end of the
Tax reform has undergone much debate in the political stratosphere recently. The tax system has been stigmatized because of a multitude of reasons that include corruption. Additionally, tax reform is a very complex issue. In addition, there has been an abundance of negotiations in Congress to pass some type of tax reform. Despite these talks, actual action has remained stagnant. This topic clearly reflects the collective action principle and the policy principle due to failed tax reform negotiations and the outcomes of various legislation.
A growing trend in our society today is corporate tax evasion. It has become increasing more common for corporations to pay no or little income tax, and in some cases actually receive money back from the government. It is illegal and therefore deviant by that definition. Corporate tax evasion (using borderline legal means) is widespread. White-collar crime is a term that is usually applied to crimes associated with business that do not involve violence or bodily injury to another person. Corporate tax evasion falls into the category of white collar crime.
If Moyer would sell the car without trade in, she will have to deduct about 8% from the list price, which makes the sales to $13,248.
other. The vechile regrestration tax was 60$ for cars and 30$ for morotcycles and with
According to Accounting Theory: Contemporary Accounting Issues by Evans, accountants have developed two alternative approaches to accounting for income taxes, which are the cash method and the allocation method. The cash method is described as a simple and direct approach. The amount of income taxes actually paid for the year is reported on the Income Statement. The amount comes from the firm's income tax return and fit is not adjusted in any way. Therefore, the firm's actual transaction to record its income tax liability is the basis for the amount of the income tax expense reported on the Income Statement. The allocation method is a bit different. The actual amount of tax that is paid in the year is ignored when it comes to reporting income tax expense on the Income Statement. The amount of income tax expense reported on the Income Statement is based on the on the income tax rate that the firm pays, which is applied to the amount of pretax income. This makes the Income Statement perfectly consistent with the before-tax income. Using the allocation method makes it look like all items on the Income Statement based on the same method.
foreign cars in to Japan and even then they are so heavily taxed that the
A major challenge of doing business internationally is to adapt effectively to different cultures. Steve Kafka, an American of Czech origin and a franchiser for Chicago Style Pizza has decided to expand his business to Czech Republic. This is a risky decision and Steve anticipates he will face obstacles as he goes about setting up the new pizza outlet at this new location, Prague.
... Also important is the price of complements, or goods that are used together. When the price of gasoline rises, the demand for cars falls.
In fact, automobile owners don’t have the realization that their vehicles are money eating machines. For instance, Erin Stepp (2015), author of Annual Cost to own operate a Vehicle, states that, “the annual cost to own, and operate a vehicle has fallen to $8,698”. Certainty, automobile owners are curious to know as to why they pay a substantial amount to own an automobile?