Assignment 1: Worksheet 3

1)     What is income tax?

Tax on the income you get goes to the government – various benefits, education, and roads/hospitals.

2)     What is National Insurance?

National insurance pays for your healthcare

3)     What does VAT stand for and how much is it set at?

V.A.T stands for Value Added Tax, There are three rates of VAT, depending on the goods or services the business provides. The rates are:

·       standard - 20 per cent

·       reduced - 5 per cent

·       zero - 0 per cent

3) Calculating the cost of a job – making sure you don’t lose out.

You are doing a job which involves you travelling to Swindon, either by train or by car, staying overnight. You will have three meals while you are there – dinner, breakfast and lunch.

The job will cost you £80 in materials and the company you are working for will not pay your expenses additionally. You expect the job in total to take you three days.

You want to make £100 a day net – ie after your tax and VAT has been taken out. Work out how much you are going to charge the company for the job.

a)     Find a hotel in Swindon where you are going to stay. Don’t ‘take the mickey’ – the company will not be impressed with you using a five star hotel. Look up their rates – is breakfast included, even dinner? Obviously then you would not have to add an allowance for these meals. £35 for one night.

b)     Calculating petrol – using google maps should give you how much it will cost in petrol.

c)     OR using the train – using the train planner will show you how much the fare would be. You will be travelling at peak times. £47.50 for a return.

d)     Make allowances for any meals that are not included in your hotel rate. Again, you are not fine dining – how much does a good meal at Nando’s cost? Tesco Meal Deal x2 £6.00

e)     Add all these costs together – your travel, hotel, and meals, your £80 in materials and the £100 a day for three days you want to earn.

4)     How much is this?

£468.50

Now you have to work out your tax.

Tax at the basic rate is 20%, so how much is that on the total for your job? Find out and make a note of it, then add that to your total. This final amount is how much you will charge for the job.

£562.20

Then list:

The total you will charge the company for the job. £601.00

How much are you putting into a savings account to cover your tax? £200.00

How much of the final amount will be there to cover your expenses?

£399.00œ