Question 5 (a) There has been much talk in the UK recently about introducing an unexpected and credibly one off wealth tax to support the economy in light of the COVID 19 pandemic However, the Chancellor of the Exchequer, Rishi Sunak, has refused to introduce such a tax Requirement (i) Discuss the benefits of an unexpected and credibly one off wealth tax as a revenue raising mechanism with reference to the generally recognised characteristics of a desirable tax system 12 Marks (ii) Briefly discuss Rishi Sunaks argument against introducing a one off wealth tax in the UK 2 Marks (b) There has also been much talk in the UK recently about headline rates of tax and effective rates of tax with respect of how much tax wealthier UK citizens actually pay Requirement Discuss, with reference to headline rates of tax and effective rates of tax, whether you believe that wealthier UK citizens pay enough tax RATES AND ALLOWANCES Income Tax Starting rate for savings income 1 5,000 0 Basic rate 1 37,500 20 Dividend ordinary rate 1 37,500 7 5 Higher rate 37,501 150,000 40 Dividend upper rate 37,501 150,000 32 5 Additional rate Above 150,000 45 Dividend additional rate Above 150,000 38 1 Personal savings allowance (maximum) Dividend allowance 1,000 2,000 Personal allowance 12,500 Marriage allowance 1,250 Blind persons allowance 2,5000 Married couples allowance Born before 6 April 1935 9,075 Minimum amount 3,510 Income limit for married couples allowance 30,200 Income limit for personal allowance 100,000 Car Benefit Percentage Emission rating Taxable percentage of list price Zero emmissions 0 Up to 50 g km 2 14 51g km to 54g km 15 55g km to 59g km 16 60g km to 64g km 17 65g km to 69g km 18 70g km to 74g km 19 75 g km 20 Each additional 5g km 1 increase Maximum charge 37 Car Fuel Benefit The base figure for calculating the car fuel benefit is 24,500 These percentages are 2 lower in 2020 21 if the car is registered on or after 6 th April 2020 Official Rate of Interest 2 25 Page 9 11 Authorised mileage rates First 10,000 miles per year Miles in excess of 10,000 Motor cars and vans 45p 25p Motor cycles 24p 24p Bicycles 20p 20p Residence Status Application of Sufficient Ties Test Days Spent in UK Arrivers Leavers Fewer than 16 days Always non resident Always non resident 16 45 days Always non resident Resident if at least 4 ties apply 46 90 days Resident if at least 4 ties apply Resident at least 3 ties apply 91 120 days Resident if at least 3 ties apply Resident at least 2 ties apply 121 182 days Resident if at least 2 ties apply Resident if at least 1 ties applies 183 days or more Always resident Always resident Capital Gains Tax Annual exempt amount 12,300 Standard rate 10 , (residential property 18 ) Higher rate 20 (residential property 28 ) Business asset disposal relief rate 10 Business asset disposal relief lifetime limit 1,000,000 Corporation Tax Rate 19 Value Added Tax (VAT) Standard rate 20 Reduced rate 5 Registration threshold 85,000 Deregistration threshold 83,000 CO2 emissions (g km) Quarterly VAT period 120 or less 144 125 218 130 231 135 246 140 261 145 275 150 290 155 305 160 319 165 334 170 348 175 362 180 377 185 392 190 406 195 421 200 436 205 450 210 464 215 479 220 493 225 or more 508

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Question 5 (a) There has been much talk in the UK recently about introducing an unexpected and credibly one-off wealth tax to support the economy

Question 5

(a) There has been much talk in the UK recently about introducing an unexpected and credibly one-off wealth tax to support the economy in light of the COVID-19 pandemic. However, the Chancellor of the Exchequer, Rishi Sunak, has refused to introduce such a tax.

Requirement

(i) Discuss the benefits of an unexpected and credibly one-off wealth tax as a revenue raising mechanism with reference to the generally recognised characteristics of a desirable tax system.

12 Marks

(ii) Briefly discuss Rishi Sunaks argument against introducing a one-off wealth tax in the UK.

2 Marks

(b) There has also been much talk in the UK recently about headline rates of tax and effective rates of tax with respect of how much tax wealthier UK citizens actually pay.

Requirement

Discuss, with reference to headline rates of tax and effective rates of tax, whether you believe that wealthier UK citizens pay enough tax.

RATES AND ALLOWANCES Income Tax

Starting rate for savings income

1 - 5,000

Basic rate

1 - 37,500

Dividend ordinary rate

1 - 37,500

7.5

Higher rate

37,501 - 150,000

Dividend upper rate

37,501 - 150,000

32.5

Additional rate

Above 150,000

Dividend additional rate

Above 150,000

38.1

Personal savings allowance (maximum)

Dividend allowance

1,000

2,000

Personal allowance

12,500

Marriage allowance

1,250

Blind persons allowance

2,5000

Married couples allowance:

Born before 6 April 1935

9,075

Minimum amount

3,510

Income limit for married couples allowance

30,200

Income limit for personal allowance

100,000

Car Benefit Percentage:

Emission rating

Taxable percentage of list price

Zero emmissions

Up to 50 g/km*

2%-14%

51g/km to 54g/km*

15%

55g/km to 59g/km*

16%

60g/km to 64g/km*

17%

65g/km to 69g/km*

18%

70g/km to 74g/km*

19%

75 g/km*

20%

Each additional 5g/km

1% increase

Maximum charge

37%

Car Fuel Benefit:

The base figure for calculating the car fuel benefit is 24,500.

*These percentages are 2% lower in 2020/21 if the car is registered on or after 6th April 2020

Official Rate of Interest: 2.25%

Page 9/11 Authorised mileage rates

First 10,000

miles per year

Miles in excess

of 10,000

Motor cars and vans

45p

25p

Motor cycles

24p

Bicycles

20p

Residence Status: Application of Sufficient Ties Test Days Spent in UK

Arrivers

Leavers

Fewer than 16 days

Always non-resident

16-45 days

Always non-resident

Resident if at least 4 ties apply

46-90 days

Resident if at least 4 ties apply

Resident at least 3 ties apply

91-120 days

Resident if at least 3 ties apply

Resident at least 2 ties apply

121-182 days

Resident if at least 2 ties apply

Resident if at least 1 ties applies

183 days or more

Always resident

Capital Gains Tax Annual exempt amount	12,300
Standard rate	10%, (residential property 18%)
Higher rate	20% (residential property 28%)
Business asset disposal relief rate	10%
Business asset disposal relief lifetime limit	1,000,000

Corporation Tax Rate

19%

Value Added Tax (VAT) Standard rate	20%
Reduced rate	5%
Registration threshold	85,000
Deregistration threshold	83,000

CO2 emissions (g/km)	Quarterly VAT period
120 or less	144
125	218
130	231
135	246
140	261
145	275
150	290
155	305
160	319
165	334
170	348
175	362
180	377
185	392
190	406
195	421
200	436
205	450
210	464
215	479
220	493
225 or more	508