VAT, TAX AND NATIONAL INSURANCE

• Tax is something which you may pay which is demanded by the government. It is usually involuntary. It is used to enforce government activities
• VAT is a certain amount of money added to a product. The VAT is set by how much the product took to make in the production stage. You pay this to the person which you bought the product off.
• You pay national insurance to quality for certain benefits such as your pension. You only pay national insurance if you are over the age of 16 and you are earning a certain amount of money each week. You pay this to the government.

Will or tax it all depends on how much you earn yearly. This amount to how much tax that you pay. “People with taxable income up to £31,785 are basic-rate taxpayers and pay tax at 20% (with £10,600 personal allowance” Reference

The amount of VAT that you pay is depending on what product that you purchase and how much it cost the manufacturer to create that product to be sold.

To pay national insurance you have to be earning over £155 a week or self employed and making a profit of £5,965 or more each year. You also need a national insurance number. This protects your national insurance record.

If you do not end up paying your TAX then you could be jailed for Tax evasion because it is illegal to avoid paying your tax or sometimes you can get off lightly by paying a fine depending on the severity of the case in the first place 

 

Usually you will have to pay a certain amount of tax depending on how much money that you may earn and the standard personal allowance before you even pay tax is usually £11,000 and this is the amount of money that you can earn without paying tax on the money that you earn.