CAT / FIA FTX Syllabus A. Introduction To The Uk Tax System - The different types of capital and revenue tax - Notes ^{1 / 1}

So this is SIMPLE, dimple x

Basically DIRECT taxes are paid DIRECTLY to HMRC

But, in true accountancy style, we complicate it unnecessarily by splitting them into revenue and capital taxes - but hey-ho we can roll with that...

Direct Revenue Tax

These are based on income / profits

Basically the more income or profit, the more tax you pay..

1. Example 1: Income Tax paid on different types of income

2. Example 2: Corporation Tax paid on company profits

3. Example 3: National Insurance Contributions paid on employment income / trading profits of the self employed

Direct Capital Tax

These are based on assets sold or gifted

Basically the more the asset is sold for (or the higher the gift), the more tax you pay..

1. Example 1: Capital Gains Tax

2. Example 2: Inheritance Tax

oooh an intermediary - get me!

Basically think of this as a shop for example - you buy an item with tax on it, but you pay the shop. The shop then pays this tax to the HMRC.

Example: VAT