The calculations for the capital gains tax Case Study

The calculations for the crown gains tax - Case Study ExampleThe calculations for the capital gains tax are shown in the appendix. From the calculations it may be observed that it is advisable to sell off the business building before 05th April 2008 as you can avail the indexation registration and taper relief which are no more available. It may be noned that the indexation and taper relief are the allowanced granted by the government to depict for the increase in the asset value due to inflation (Chris Horne). In case you decide to sell of the property after 05th April 2008 you many have to even up higher CGT of 18,000. However in the case of the personal paintings since they have been acquired only in the year 2005 they do not stand eligible for any allowances and the capital gains will simply be the difference between the sale proceeds and the cost. Hence in this case it is advisable to sell the paintings after 05th April 2008 as the CGT on the chargeable gains can be paid a t lower tax rate of 18 percentage.Income from employment is subjected to income tax as well as consort 1 National Insurance Contributions NIC). Payment of the Tax and NIC are normally undertaken by the employer through the PAYE system. However the employee who has other incomes subjected to tax and whose tax is not fully paid by the employer may complete a tax return and pay the NIC. Contributions to NIC are being made by both the employer and employee. The employee has to accomplish contributions to NIC at 11percent or 9.4 percent between the primary threshold limit and the upper lucre limit. A charge of 1 percent is payable for earnings above the upper earnings limit. No NIC is payable by the employee or employer on the earnings up to the primary threshold limit. Depending on whether the employee is within the maintain Second Pension (S2P) or whether he has contracted out using a final salary (FS) or money purchase scheme (MP) the rank of NIC payable on earnings are determin ed. ParticularsContracted in Within S2P Contracted OutOther than S2PPrimary Threshold to Upper Earning Limit11.0%9.4% to a higher place Upper Earning Limit1.0%1.0%As per the calculations shown in the appended income statement assuming that you have contracted out of the state pension scheme, you may have to contribute 9.4 percent of 23,760 i.e. 2233.44 towards the National Insurance Contribution.Additional Tax Burden on Cigarettes and WinesWe understand that you and your wife are both heavy smokers and drinkers. Beware that the budget for the year 2008 has compose additional tax burden on the cigarettes, wine, and beer to the cessation of 0.14p on a bottle of wine, 0.4p on a pint of beer and 0.11p on a pack of cigarettes and to this extent the cost of these items would go up. We do hope you will revise your consumption of these items in view of increased burden on your income.Other Tax creditThe budget for the year 2008 has made the following changes in other Tax Credits for which you are entitled. Tax Credits2007-082008-09Child Tax Credit - Family chemical element1,8452,085Working Tax Credit - Basic1,7301,800Married Couple Allowance2,4402,540We have provided