19. Taxation CHECK YOUR ENGLISH VOCABULARY FOR BANKING AND FINANCE

CHECK YOUR ENGLISH VOCABULARY FOR BANKING AND FINANCE

19. Taxation

My name's Marcus. I work for a bank. I'm on PAYE (Pay As You Earn). This means that tax is automatically deducted from my salary. My salary isn't particularly high, so I only pay tax at the basic rate. My personal allowance is £5,000 a year. Then I pay 10% on the next £2,500, and 22% on everything above that. I also have to pay National Insurance, of course, which is another 9%. My gross pay is about £19,000 but my take-home pay is around £15,000. My name's Yvonne. I'm a self-employed dentist. Every year I have to fill in a tax return. Dentists can earn quite a lot of money, and my income is usually well into the higher rate. In other words, I have to pay 40% on everything I earn over £45,000 a year. However, the salary I pay my receptionist, the rent for my surgery and the cost of my equipment are all tax deductible. Only about half my turnover counts as taxable income. The National Insurance rules are quite complicated for self-employed people, but my accountant takes care of that for me. A. Does each sentence describe Marcus, Yvonne, both or neither? Marcus Yvonne 1. Is a tax payer X X 2. Works for himself / herself 3. Has tax deducted at source 4. Submits an annual tax return 5. Income exceeds the personal allowance 6. Income exceeds the 10% band 7. Income exceeds the 22% band 8. Pays tax at the higher rate 9. Net earnings are about £4,000 lower than gross earnings 10. Gross earnings are below the National Insurance threshold 11. Pays National Insurance 12. Has tax-allowable expenses 13. Employs an accountant 14. Lives entirely on unearned income B. Match the type of tax with the definition. 1 Income tax Capital gains tax Value Added Tax (VAT) Stamp duty Wealth tax Inheritance tax Corporation tax a Tax on profits made by selling assets such as businesses, rented houses and shares. A tax on specific transactions. For example, in the UK, it is payable by the buyer of a house. Tax on earnings, profits from investments and any other sources of personal income. Tax on goods and services. In the UK it is charged at 17.5%. In the UK, this is the name for the tax paid by companies. Tax on assets (such as houses) payable in some countries, but not in the UK. Tax on the assets of a person who has died. Used to be called "death duties". 2 b 3 c 4 d 5 e 6 f 7 g C. Match the terms with the examples. It's not easy – some of the terms have close meanings. 1. tax relief 2. tax break 3. tax exile 4. direct taxation 5. indirect taxation 6. tax avoidance 7. tax evasion 8. tax free a. Ms Brown is British, but to save tax she lives in Monaco. b. No tax is payable on winnings from the National Lottery. c. From April 6th next year, theatres will not have to pay tax on profits below £20,000. d. VAT e. Ms Smith pays an accountant to find legal ways to reduce her tax liability. f. income tax g. Liability for capital gains is reduced by 7.5% for each year of ownership of the asset. h. Mr Jones made a profit of £100,000 from selling a business, but didn't declare it to the Inland Revenue. D. Choose the best word from each pair in grey type. 1 Alan's company is registered in his wife's name for tax reasons / motives. 2 Until last year, some companies paid part of their executives' salaries in valuable antiques, to save tax. However, the government has now closed this wormhole / loophole. 3 In the UK, food and children's clothes are free / exempt from VAT. 4 Only about 4% of the population are in the highest tax bracket / level. 5 Any company which relocates to Wales will pay not tax for the first two years. This tax incentive / gift is designed to help reduce unemployment in the region. 6 Last year I paid too much tax, so this year I received a tax refund / rebate.

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