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Reply to: Government racket
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Previously on "Government racket"
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Originally posted by VectraMan View PostEverybody is completely wrong.
If you invoice £100, then weekly or monthly your turnover is going to be less than your tax code and you can pay it all as salary and pay no tax whatsoever.
So you get to keep the full £100.
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Everybody is completely wrong.
If you invoice £100, then weekly or monthly your turnover is going to be less than your tax code and you can pay it all as salary and pay no tax whatsoever.
So you get to keep the full £100.
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If you invoice £100 and then with the money you take home you foolishly fill up your car with petrol/diesel, the government are getting about £90 of it.
Hope that makes it all worthwhile for you.
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Originally posted by Mobile Chicane View PostOk, thanks Faqqer, most instructive.
Same way that some companies will give you a "yes / no" answer to the question "is my contract outside IR35?"
You need to be more precise on the question - the line "If I'm not right, where am I wrong?" wouldn't go amiss. I think you'll find I answered the question raised in the post, though, and even implicitly answered the second question too.
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Originally posted by Mobile Chicane View PostHave I got this roughly right?
If I invoice £100.
minus 19% corporation tax = £19
minus 40% higher tax tax = £32.40
minus 17.5% VAT on all my other spending (aside from food and kids clothes etc.) = £8.50
So out of £100 earnt and invoiced I get to actually spend £40.01
oh and the government gets an extra 17.5% VAT on top of my invoice. So they get a whopping £77.40 for every £100 I invoice.
If they were a high street bank with those sort of charges they'd be seen as criminals. How do they get away with it as our servants??
Nick
You get to keep around 44% of your income.
Of course it is far worse than this in practice because of inflation, car tax, petrol tax, council tax, hot dog tax, alcohol tax etc. Another problem with this calculation is it doesn't take into account the harm the government do to you while spending the money. e.g. you have to travel further to work because all the prime central areas are full of council houses, you pay more for your food because of the CAP, you are on a waiting list for your ferrari because council bosses have snapped them all up etc. etc.
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Originally posted by Mobile Chicane View Postminus 40% higher tax tax = £32.40
Nick
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Originally posted by Mobile Chicane View PostHave I got this roughly right?
If I invoice £100.
minus 19% corporation tax = £19
minus 40% higher tax tax = £32.40
minus 17.5% VAT on all my other spending (aside from food and kids clothes etc.) = £8.50
So out of £100 earnt and invoiced I get to actually spend £40.01
oh and the government gets an extra 17.5% VAT on top of my invoice. So they get a whopping £77.40 for every £100 I invoice.
If they were a high street bank with those sort of charges they'd be seen as criminals. How do they get away with it as our servants??
Nick
Completely wrong. Your 40% tax bill is partially imputed by the CT paid, and the VAT paid on your invoice is reclaimed by your client, and in many cases you pay less VAT than actually charged due to Flat Rate scheme.
Basically speaking: £100 earned = £60 received, divided by 1.175 = £51 worth of shiny Ipod for £100 earned (and in reality more like £53 because of the FRS). Of course VAT is not on everything so the average purchase tax is much lower than 17.5%
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hmm
Ok, thanks Faqqer, most instructive. Good to see where I've got it wrong. Perhaps don't respond at all next time - might be a little more helpful.
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you forgot to mention Road Tax, duty over and above VAT - like Petrol, Beer / Wine & fags etc.
Also all the food etc you buy, the price has already got the sellers tax bill factored into it - so really YOU actually owe the government money for working...
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Government racket
Have I got this roughly right?
If I invoice £100.
minus 19% corporation tax = £19
minus 40% higher tax tax = £32.40
minus 17.5% VAT on all my other spending (aside from food and kids clothes etc.) = £8.50
So out of £100 earnt and invoiced I get to actually spend £40.01
oh and the government gets an extra 17.5% VAT on top of my invoice. So they get a whopping £77.40 for every £100 I invoice.
If they were a high street bank with those sort of charges they'd be seen as criminals. How do they get away with it as our servants??
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