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|Posted on 20 April, 2016 at 6:54||comments (12)|
I really like this tale about Tax and whether it is more, or less, fair to the poor or to the rich......
Suppose that every day, ten men go out for a beer and the bill for all ten comes to £100...
If they paid their bill the way we pay our taxes, it would go something like this.......
The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.
"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.
The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free, but what about the other six men?
The paying customers? How could they divide the £20 windfall so that everyone would get his fair share?
They realised that £20 divided by six is £3.33, but if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid £2 instead of £3 (33% saving).
The seventh now paid £5 instead of £7 (28% saving).
The eighth now paid £9 instead of £12 (25% saving).
The ninth now paid £14 instead of £18 (22% saving).
The tenth now paid £49 instead of £59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free but, once outside the bar, the men began to compare their savings.
"I only got a pound out of the £20 saving," declared the sixth man.
He pointed to the tenth man, "but he got £10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.
Taken from an article by:
David R. Kamerschen, Ph.D.
Professor of Economics.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible!
|Posted on 15 April, 2016 at 15:15||comments (5)|
Paul Chapman - Announced in UK's Top 200 Accountants
"On Sunday 10th April the Sunday Times published their first supplement listing the Top 200 Accountants in the UK based on reviews on the independent consumer ratings website VouchedFor.co.uk. We are proud, but not at all surprised, to say that Paul Chapman was featured. To be included Paul was highly recommended by 10 of his clients. All had rated his services over 4 stars out of 5, which is a fantastic achievement. We’d like to thank all of the clients who took the time to share their positive feedback on VouchedFor.co.uk.
Adam Price, Founder of VouchedFor.co.uk commented: “At VouchedFor we’re passionate about helping people to find great financial and legal advice. At certain points in life the majority of us would benefit from expert help with complex issues such as pension planning, securing a mortgage or for advice on a legal issue. Listing professionals alongside verified reviews from their existing clients makes it easy to find a respected and trusted expert like Paul to help. We would like to congratulate Paul on being one of the Top 200 - it’s a great endorsement of the service Paul provides. You can see his reviews by going to https://www.vouchedfor.co.uk/accountant/plymouth/23055-paul-chapman
|Posted on 29 September, 2015 at 10:25||comments (6)|
Consumer Rights Act 2015 - all change from 1st October 2015! See the article below:
|Posted on 1 August, 2015 at 5:43||comments (15)|
5 Financial Tips for Newly-Employed Young People
Summer. A time for barbeques, trips to the beach, ice cream and, for many teenagers and young adults, their first jobs. What better time, then, to inform the newly employed about sound financial practices, before they’re tempted to spend all of their hard earned income having a good time?
For many, the pursuit of fun is more of a priority than saving money. Are they right?Just turn on the radio and you’ll hear any number of songs about frivolous consumerism. In the case of one of this summer’s ubiquitous songs, "Time of My Life", the rapper Pitbull (aka Armando Christian Pérez) celebrates the disastrous practice of spending money he doesn’t have:
Instant gratification is tempting, but making efforts to teach young adults how to adopt sound fiscal practices will set them up for a lifetime of financial solvency and independence. And, with the right financial savvy, young consumers could presumably afford to spend a little extra when it’s time to “have a good time.” Here are five tips to share with the newly employed people in your life:
Save, Save, Save! Saving can be as simple as setting aside a certain portion of your pay to go directly into a savings account each pay period, rather than in your current account, from where you will spend. If your employer offers direct deposit, select a specific amount or percentage of your pay to go directly into a savings account. If you don’t have direct deposit, you can commit to put 10 percent of your pay into a savings account. Use a direct debit or standing order to take the money from your current account as soon as it gets paid in. You can’t miss what you never saw in the first place.
Learn to Budget If you don’t know how much money you have coming in and how much you have going out every month, it is difficult to plan. Assess how much you make each month. Then, figure out what fixed costs you have—rent, utilities, commuting expenses, gas, discretionary spending, and other one-time expenses like holidays, gifts and vacations. That will give you a better sense of what you can and can’t afford.
For teenagers: When I was a teenager, my friends and I started a babysitting service. (Think the 1980’s book series The Baby-sitters Club.) the self-created rules of the business partnership required us to put a certain percentage of each babysitting job into our organization’s savings account at a local bank. We also had a fleet of “associates” who we called on when we couldn’t work. They were required to pay us 10 percent of what they earned. By the time we decided we were too old to babysit, we had more than £1,200 in the bank (back in the 1970s!).
For young adults: While large purchases and expenses—a home or a car, or starting a family—may seem a long way off, preparing for the future now, financially speaking, can put you in a better position to make those large financial decisions. So what can you do? Forego cable or sky television for a Netflix subscription, bring your lunch to work most days, skip Starbucks or Costa and drink the coffee offered at work or make it at home, buy a few quality items of clothing and avoid cheap, ill-made pieces. Consider "value for money" as your new motto. Also consider taking a second job, such as house sitting, pet sitting or dog walking. Got a hobby that you love? See if you can find a way to make money from it.
Avoid Debt It’s simple--if you can’t afford something, don’t buy it. Instead, devise a plan to save up until you can afford to purchase the item without debt. Sometimes waiting can make you realize the item isn’t that important, or you might find a way to make this purchase fit into your budget. Another way to avoid debt is to learn the difference between your wants and needs. Also, be mindful when signing up for a credit card that it should be used responsibly. While convenient, and at times, necessary, credit cards make it easy to overspend.
Avoid trouble with the tax manAsk for Help Becoming fiscally responsible takes time and guidance. Don’t be afraid to ask for help! Friends and family may have different suggestions for how to save or invest your money, or handle University or College loans. Sometimes those that know you best can offer solutions that will best suit your needs. Ask your friendly, local accountant for advice - s/he should be able to provide a free initial consultation. If you provide young people with sound guidance on fiscal responsibility early in their working life, you are setting them up for a lifetime of financial stability and good decision making. And, hopefully, now and again they will be able to afford to have, as Pitbull says, the time of their lives.
Extracted and adapted from an article by Lauren J. Sternberg, Communications Manager, American Institute of CPAs
|Posted on 15 December, 2014 at 8:48||comments (12)|
How to have a tax free Christmas
(15 Dec 2014)
The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head.
Christmas Gifts from suppliers to employees.
Certain gifts from third parties are tax free if all these conditions are satisfied:
Some other gifts are not taxable.
If you earn at a rate of less than £8,500 a year and you are not a director, a gift to mark a personal occasion, such as a wedding present, which is not a reward of your employment, is not taxable. If you earn at a rate of £8,500 a year or more, or you are a director, any gift from your employer is taxable unless your employer is an individual and makes the gift in the course of family, domestic or personal relationships.
Seasonal gifts from Employer to Employee
An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits.
For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned. If a benefit is trivial it should not be included in a PSA (EIM21861).
If the gift extends beyond one of the items mentioned above, for example from a bottle or two to a case of wine, or from a turkey to a Christmas hamper, you will need to consider the contents and cost before being able to determine whether the benefit is trivial.
PAYE Settlement Agreement (PSA)
For practical purposes it may be that small cash and money’s worth benefits can be included in a PSA. PAYE Settlement Agreements (PSA’s) are requested by Employers and subject to agreement with HMRC. Under this agreement the employer will be responsible for accounting for any tax and national insurance liabilities arising. Any items covered by a PSA will not need to be shown on forms P35 and P11D at the end of the tax year.
Have a Great Christmas and New Year!
|Posted on 14 November, 2014 at 14:28||comments (5)|
November 14, 201418:00
Almost a third of British workers run some kind of creative business outside their main jobcontributing an estimated £15bn to the UK economy, according to new researchfrom Moo.com. Profitability among this group of enterprises has increased by 32% in the past year. One in ten part-time creative entrepreneurs plans to leave their job to focus on their business full-time within the next year. However, 60% said it was their passion for the business, and not making money, that motivated them. The most popular part-time creative ventures are in food and cooking, gardening, photography and knitting. (According to Law Donut)
So why are microbusinesses taking off:
Here are our top 20 home based business ideas: