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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 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 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 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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