How much tax do you really pay?

[Lefty Two Drams]

We were discussing this in the office today.

One quick spreadsheet later to add up:

(I'm a 1-man ltd company so actually work in a reasonably tax-efficient manner. My Mrs is a shareholder in said company)

VAT return
Corporation Tax
Personal tax (me + wife)
Fuel duty & VAT on fuel (based on 2 drivers in the household, 20k miles total, avg 25mpg)
VED (3 vehicles in the household at the moment)
TV Licence
Council Tax
VAT on purchases (I assumed that 50% of what we spend monthly has VAT on it).

57% !!!!!!

And that's not including National Insurance contributions (both company and personal). I've probably forgotten some stealth tax in there too...




As comparison, a US colleague of mine did the same exercise and came out with 24%.

Edited by Lefty Two Drams on Monday 5th April 13:55

[jimmyjimjim]

I left when I noted I was paying 48% out of my paycheck on tax and NI.
Didn't even bother working out car tax, council tax, VAt on purchases or anything like that - it was clearly going to be way over half, and I wasn't even earning a fraction of what some of the people here earn.

Down to 27% in deductions from paycheck right now, and sales tax is 6%.

[tangent police]

Not as much as I used to

[Lefty Two Drams]

I imagine that somebody on a high fixed salary could easily be at 60-70%.

I forgot to include duty on alcohol. I buy a lot of alcohol

[Eric Mc]

Lefty Two Drams said:

We were discussing this in the office today.

One quick spreadsheet later to add up:

(I'm a 1-man ltd company so actually work in a reasonably tax-efficient manner. My Mrs is a shareholder in said company)

VAT return
Corporation Tax
Personal tax (me + wife)
Fuel duty & VAT on fuel (based on 2 drivers in the household, 20k miles total, avg 25mpg)
VED (3 vehicles in the household at the moment)
TV Licence
Council Tax
VAT on purchases (I assumed that 50% of what we spend monthly has VAT on it).

57% !!!!!!

And that's not including National Insurance contributions (both company and personal). I've probably forgotten some stealth tax in there too...




As comparison, a US colleague of mine did the same exercise and came out with 24%.

Edited by Lefty Two Drams on Monday 5th April 13:55

With a clever accountant, you should not be paying ANY Income Tax.

[Rach*]

Eric Mc said:

Lefty Two Drams said:

We were discussing this in the office today.

One quick spreadsheet later to add up:

(I'm a 1-man ltd company so actually work in a reasonably tax-efficient manner. My Mrs is a shareholder in said company)

VAT return
Corporation Tax
Personal tax (me + wife)
Fuel duty & VAT on fuel (based on 2 drivers in the household, 20k miles total, avg 25mpg)
VED (3 vehicles in the household at the moment)
TV Licence
Council Tax
VAT on purchases (I assumed that 50% of what we spend monthly has VAT on it).

57% !!!!!!

And that's not including National Insurance contributions (both company and personal). I've probably forgotten some stealth tax in there too...




As comparison, a US colleague of mine did the same exercise and came out with 24%.

Edited by Lefty Two Drams on Monday 5th April 13:55

With a clever accountant, you should not be paying ANY Income Tax.

Eric will you be my accountant please?



They're taking all my fun money

[Lastinclass]

Just working on that at the moment - brought about by the offer of additional salary for removalof my company car (I'm PAYE)

Think I might go back to Switzerland.........

[Eric Mc]

Rach* said:

Eric Mc said:

Lefty Two Drams said:

We were discussing this in the office today.

One quick spreadsheet later to add up:

(I'm a 1-man ltd company so actually work in a reasonably tax-efficient manner. My Mrs is a shareholder in said company)

VAT return
Corporation Tax
Personal tax (me + wife)
Fuel duty & VAT on fuel (based on 2 drivers in the household, 20k miles total, avg 25mpg)
VED (3 vehicles in the household at the moment)
TV Licence
Council Tax
VAT on purchases (I assumed that 50% of what we spend monthly has VAT on it).

57% !!!!!!

And that's not including National Insurance contributions (both company and personal). I've probably forgotten some stealth tax in there too...




As comparison, a US colleague of mine did the same exercise and came out with 24%.

Edited by Lefty Two Drams on Monday 5th April 13:55

With a clever accountant, you should not be paying ANY Income Tax.

Eric will you be my accountant please?



They're taking all my fun money

I'm allways prepared to help fellow PHers.

[spikeyhead]

I'm currently working as an employee in the Netherlands, so 35% disappears from my salary in tax.

Before that I'd been running my own UK Ltd Co, so no income tax or NI, just corporation tax and all the indirect taxes.

[soad]

Lefty Two Drams said:

I buy a lot of alcohol

Me too, although not as much as you!

[Eric Mc]

spikeyhead said:

I'm currently working as an employee in the Netherlands, so 35% disappears from my salary in tax.

Before that I'd been running my own UK Ltd Co, so no income tax or NI, just corporation tax and all the indirect taxes.

I bet the Dutch have many indirect taxes too. They will definitely have VAT.

[spikeyhead]

Eric Mc said:

spikeyhead said:

I'm currently working as an employee in the Netherlands, so 35% disappears from my salary in tax.

Before that I'd been running my own UK Ltd Co, so no income tax or NI, just corporation tax and all the indirect taxes.

I bet the Dutch have many indirect taxes too. They will definitely have VAT.

You're right, but I spend so little of my salary that even their 19% VAT probably only means 1% more of my salary goes to them. Not sure about the beer and smoke tax though, that's probably a higher contribution.

[GetCarter]

Eric Mc said:

With a clever accountant, you should not be paying ANY Income Tax.

How does that work then? I have some VERY clever accountants, and I pay tens of thousands.

[spikeyhead]

GetCarter said:

Eric Mc said:

With a clever accountant, you should not be paying ANY Income Tax.

How does that work then? I have some VERY clever accountants, and I pay tens of thousands.

I think that Eric has recently given a good example in the business forum, alternatively a browse through the pcg site or any decent accountant can show you how to get an annual income of about £43k without tax.

[GetCarter]

Ta for that. Not quite no income tax then!

Very happy to entertain all ideas!

[Eric Mc]

GetCarter said:

Ta for that. Not quite no income tax then!

Very happy to entertain all ideas!

No, you can have an income of up to £43,875 for 2009/10 and not pay a single penny of Income Tax - and no NI either.

[RYH64E]

Eric Mc said:

GetCarter said:

Ta for that. Not quite no income tax then!

Very happy to entertain all ideas!

No, you can have an income of up to £43,875 for 2009/10 and not pay a single penny of Income Tax - and no NI either.

£37400 dividends + £6475 salary? I thought there would be some NI though? And Corporation Tax.

You can still transfer shares and pay a divi to your wife as well, take advantage while you can.

Edited by RYH64E on Monday 5th April 21:48

[Eric Mc]

RYH64E said:

Eric Mc said:

GetCarter said:

Ta for that. Not quite no income tax then!

Very happy to entertain all ideas!

No, you can have an income of up to £43,875 for 2009/10 and not pay a single penny of Income Tax - and no NI either.

£37400 dividends + £6475 salary? I thought there would be some NI though? And Corporation Tax.

You can still transfer shares and pay a divi to your wife as well, take advantage while you can.

Edited by RYH64E on Monday 5th April 21:48

No NI, but there will be Corporation tax. However, CT is currently charged at 21%, which is a lot less than the top rates of Income Tax, which tomorrow goes up to 50%.

[RYH64E]

Eric Mc said:

RYH64E said:

Eric Mc said:

GetCarter said:

Ta for that. Not quite no income tax then!

Very happy to entertain all ideas!

No, you can have an income of up to £43,875 for 2009/10 and not pay a single penny of Income Tax - and no NI either.

£37400 dividends + £6475 salary? I thought there would be some NI though? And Corporation Tax.

You can still transfer shares and pay a divi to your wife as well, take advantage while you can.

Edited by RYH64E on Monday 5th April 21:48

No NI, but there will be Corporation tax. However, CT is currently charged at 21%, which is a lot less than the top rates of Income Tax, which tomorrow goes up to 50%.

I thought you paid class 1 NI on anything over £110 per week? I know I paid a bit in April on my lowly £6k salary.

[Shuvi]

My brother runs the accountancy arm of the family business. He uses clients money to pay his tax. Clever bd.