UK tax on a £150k Ferrari is around £140k - check my figures
Discussion
Just for amusement, I tried to work out the effective actual price a £150,000 Ferrari would be if you took EVERY tax off of the price (VAT, Income tax etc) - and I came up with a forecourt sticker price of £10,000 (+ TAX)
Can someone tell me where I'm going wrong?
_________________________
Employee Gross Income £200,000.00
So...
Income Tax £78,000
NI £7,380.50
More NI (paid by employer from salary) £26.624
Take Home Pay £87,995.50
He wants to buy a 150k Ferrari - so...
Ferrari is £150,000
Income tax paid so far (75% of annual income above) = £84,000 (obviously it'll take a few years to save up)
Import Tax 10% = £15,000
VAT 20% = £30,000
Dealership Premises Rates Tax (quite high due to large premesis and relative few car sales) = £5000
Add misc taxes, staff tax, corporation tax, tax on advertising, sponsorship taxes, F1 driver tax, all those ‘taxes’ paid to the EU (such as type approval tax, safe this safe that tax, enviromental tax) = £5,000 (this last one is a complete guess on this point) - just a mass of expenses and heaped taxes at every turn.
So, if you removed ALL of the tax from a £150,000 Ferrari, the price that would be marked on the windscreen in the dealer forecourt is . . . £10,000 (+ 140k TAX)
And now he can look forward to congestion tax, speed tax, rich b
d first year road tax…
In a slghtly related point, people keep telling me cars in Thailand are expensive; I keep telling they're not they are about the same price - but explaining how the tax is broken down differently as above is either beyond their comprehension or my ability to explain it.
Can someone tell me where I'm going wrong?
_________________________
Employee Gross Income £200,000.00
So...
Income Tax £78,000
NI £7,380.50
More NI (paid by employer from salary) £26.624
Take Home Pay £87,995.50
He wants to buy a 150k Ferrari - so...
Ferrari is £150,000
Income tax paid so far (75% of annual income above) = £84,000 (obviously it'll take a few years to save up)
Import Tax 10% = £15,000
VAT 20% = £30,000
Dealership Premises Rates Tax (quite high due to large premesis and relative few car sales) = £5000
Add misc taxes, staff tax, corporation tax, tax on advertising, sponsorship taxes, F1 driver tax, all those ‘taxes’ paid to the EU (such as type approval tax, safe this safe that tax, enviromental tax) = £5,000 (this last one is a complete guess on this point) - just a mass of expenses and heaped taxes at every turn.
So, if you removed ALL of the tax from a £150,000 Ferrari, the price that would be marked on the windscreen in the dealer forecourt is . . . £10,000 (+ 140k TAX)
And now he can look forward to congestion tax, speed tax, rich b
d first year road tax…In a slghtly related point, people keep telling me cars in Thailand are expensive; I keep telling they're not they are about the same price - but explaining how the tax is broken down differently as above is either beyond their comprehension or my ability to explain it.
Crazy Torque said:
Just for amusement, I tried to work out the effective actual price a £150,000 Ferrari would be if you took EVERY tax off of the price (VAT, Income tax etc) - and I came up with a forecourt sticker price of £10,000 (+ TAX)
Can someone tell me where I'm going wrong?
_________________________
Employee Gross Income £200,000.00
So...
Income Tax £78,000
NI £7,380.50
More NI (paid by employer from salary) £26.624
Take Home Pay £87,995.50
He wants to buy a 150k Ferrari - so...
Ferrari is £150,000
Income tax paid so far (75% of annual income above) = £84,000 (obviously it'll take a few years to save up)
Import Tax 10% = £15,000
VAT 20% = £30,000
Dealership Premises Rates Tax (quite high due to large premesis and relative few car sales) = £5000
Add misc taxes, staff tax, corporation tax, tax on advertising, sponsorship taxes, F1 driver tax, all those ‘taxes’ paid to the EU (such as type approval tax, safe this safe that tax, enviromental tax) = £5,000 (this last one is a complete guess on this point) - just a mass of expenses and heaped taxes at every turn.
So, if you removed ALL of the tax from a £150,000 Ferrari, the price that would be marked on the windscreen in the dealer forecourt is . . . £10,000 (+ 140k TAX)
And now he can look forward to congestion tax, speed tax, rich bd first year road tax…
In a slghtly related point, people keep telling me cars in Thailand are expensive; I keep telling they're not they are about the same price - but explaining how the tax is broken down differently as above is either beyond their comprehension or my ability to explain it.
??Can someone tell me where I'm going wrong?
_________________________
Employee Gross Income £200,000.00
So...
Income Tax £78,000
NI £7,380.50
More NI (paid by employer from salary) £26.624
Take Home Pay £87,995.50
He wants to buy a 150k Ferrari - so...
Ferrari is £150,000
Income tax paid so far (75% of annual income above) = £84,000 (obviously it'll take a few years to save up)
Import Tax 10% = £15,000
VAT 20% = £30,000
Dealership Premises Rates Tax (quite high due to large premesis and relative few car sales) = £5000
Add misc taxes, staff tax, corporation tax, tax on advertising, sponsorship taxes, F1 driver tax, all those ‘taxes’ paid to the EU (such as type approval tax, safe this safe that tax, enviromental tax) = £5,000 (this last one is a complete guess on this point) - just a mass of expenses and heaped taxes at every turn.
So, if you removed ALL of the tax from a £150,000 Ferrari, the price that would be marked on the windscreen in the dealer forecourt is . . . £10,000 (+ 140k TAX)
And now he can look forward to congestion tax, speed tax, rich b
d first year road tax…In a slghtly related point, people keep telling me cars in Thailand are expensive; I keep telling they're not they are about the same price - but explaining how the tax is broken down differently as above is either beyond their comprehension or my ability to explain it.
Not sure what you're trying to prove here?
People pay taxes.
Once they pay their taxes they are free to buy what they wish.
However you dont take the tax you've already paid on your income off the price of your car - that doesnt give you any meaningful figure.
your working your VAT our wrong.
You want 20% of the the figure you are adding VAT on to, not 20% of the figure once the VAT has been added. So your VAT is 25K not 30K.
And I agree with the income tax part, it has nothing to do with the cost of the car. Otherwise you would also distribute all of that tax across everything you purchased in a year, so you would have to take a proportion of income tax for the ferrari relative to its value - that is the only way you could remotely connect the two as I see it.
I wouldn't be surprised if import duty on a product to be sold for the UK market would be different than import duty if you were to ship a car say from the US.
Otherwise... spot on
You want 20% of the the figure you are adding VAT on to, not 20% of the figure once the VAT has been added. So your VAT is 25K not 30K.
And I agree with the income tax part, it has nothing to do with the cost of the car. Otherwise you would also distribute all of that tax across everything you purchased in a year, so you would have to take a proportion of income tax for the ferrari relative to its value - that is the only way you could remotely connect the two as I see it.
I wouldn't be surprised if import duty on a product to be sold for the UK market would be different than import duty if you were to ship a car say from the US.
Otherwise... spot on
You've got your maths arse backwards and are deducting the wrong values off the car price.
You could use the maths to show something else perhaps.
You can't deduct the tax paid off the car price to show the true price of the car.
You could add the tax onto the price to show the true cost of the car to the buyer.
So,
Ferrari is £150,000
Income tax paid so far = £84,000
So, to buy a £150,000 car you actually have to earn £235k.
But, it's a fairly convoluted way to show that people pay tax on their earning.
You could also show that a
Ferrari is £150,000
Import Tax 10% = £15,000
VAT 20% = £30,000
So, the car is actually worth £105000 before tax.
(notwithstanding that you have your VAT and TAX calculation wrong as mentioned above)
But, most good for sale in the country get taxed between 20% and 40% depending on Vat, import tax and probably a bunch of other direct and indirect taxes that I don't know about.
So, it's not really news.
This [Dealership Premises Rates Tax = £5000] is irrelevant – it's a tax on the dealership – it has nothing to do with the price or cost of the car. It just effects the dealers profit margin.
I think I now know why we're in a recession though if that's the quality of maths used by the average chap to work out their personal finances.
You could use the maths to show something else perhaps.
You can't deduct the tax paid off the car price to show the true price of the car.
You could add the tax onto the price to show the true cost of the car to the buyer.
So,
Ferrari is £150,000
Income tax paid so far = £84,000
So, to buy a £150,000 car you actually have to earn £235k.
But, it's a fairly convoluted way to show that people pay tax on their earning.
You could also show that a
Ferrari is £150,000
Import Tax 10% = £15,000
VAT 20% = £30,000
So, the car is actually worth £105000 before tax.
(notwithstanding that you have your VAT and TAX calculation wrong as mentioned above)
But, most good for sale in the country get taxed between 20% and 40% depending on Vat, import tax and probably a bunch of other direct and indirect taxes that I don't know about.
So, it's not really news.
This [Dealership Premises Rates Tax = £5000] is irrelevant – it's a tax on the dealership – it has nothing to do with the price or cost of the car. It just effects the dealers profit margin.
I think I now know why we're in a recession though if that's the quality of maths used by the average chap to work out their personal finances.
You've forgotten that all the people at the dealership, as well at the factory, have to pay income tax on their salaries, and then they apparently have to pay income tax (for some, completely unfathomable reason) again when they buy a car, plus their own share of the "Dealership Premises Rates Tax" (whatever the fk that is - NNDR?), and then there's VAT on their shoes, and duty on their break-time fags and beer.
When you take all this into account, you can see that Ferrari will actually pay you just over £300,000 (200,000-84,000-84,000-VAT-duty on a pack of fags - council tax for umpteen employees - the number you first though of = £301,204.57)
I've heard of Man Maths, but I think you've invented tt Maths.
k that is - NNDR?), and then there's VAT on their shoes, and duty on their break-time fags and beer.When you take all this into account, you can see that Ferrari will actually pay you just over £300,000 (200,000-84,000-84,000-VAT-duty on a pack of fags - council tax for umpteen employees - the number you first though of = £301,204.57)
I've heard of Man Maths, but I think you've invented t
t Maths.Crazy Torque said:
Can someone tell me where I'm going wrong?
Everywhere, it seems 
Crazy Torque said:
Employee Gross Income £200,000.00
So...
Income Tax £78,000
NI £7,380.50
More NI (paid by employer from salary) £26.624
Take Home Pay £87,995.50
He wants to buy a 150k Ferrari - so...
Ferrari is £150,000
Income tax paid so far (75% of annual income above) = £84,000 (obviously it'll take a few years to save up)
Now when I went to school (albeit a long time ago), 75% of £200 was £150K, not the £116k you claim........So...
Income Tax £78,000
NI £7,380.50
More NI (paid by employer from salary) £26.624
Take Home Pay £87,995.50
He wants to buy a 150k Ferrari - so...
Ferrari is £150,000
Income tax paid so far (75% of annual income above) = £84,000 (obviously it'll take a few years to save up)
Not that it should even figure in the equation, as others have said.
Just FYI and I admit these figures seem a little high but in Fiat's annual report for 2008 (old one I had lying around), As given on page 76, Ferrari net sales (ex-any sales tax) were:
2008 EUR1,921m
2007 EUR1,668m
The units delivered to the network were:
2008 6,452
2007 6,368
Now of course the sell-in vs. sell-through may have a slight lag but it is relatively immaterial for these two years given the similarity in the number of units.
So we have average unit price (ex-sales tax):
2008 EUR298k
2007 EUR262k
Obviously the big delta between the years will be mix but I strongly suspect these numbers are closer to right than anything the OP might be smoking.
2008 EUR1,921m
2007 EUR1,668m
The units delivered to the network were:
2008 6,452
2007 6,368
Now of course the sell-in vs. sell-through may have a slight lag but it is relatively immaterial for these two years given the similarity in the number of units.
So we have average unit price (ex-sales tax):
2008 EUR298k
2007 EUR262k
Obviously the big delta between the years will be mix but I strongly suspect these numbers are closer to right than anything the OP might be smoking.
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