Duty and Taxes

Just bought a small pile of koa. This is how much I had to pay my government for the privilege of doing so:

Wow!!!
That sure takes the fun out of it for sure

None of us much like to pay, but taxes are part of the cost of living in a civilized society.

Uke Don said:

None of us much like to pay, but taxes are part of the cost of living in a civilized society.

Click to expand...

Completely true, though when you’re the one paying them whilst other folk don’t contribute fairly it does grate a bit - as does some folk who mess their lives up and then expect the state to help them ...... But what really winds me up is large corporations evading tax through legal means, if your company earns profit through the U.K. economy then you should pay tax here on it - no ifs, no buts or you (all the board members) go to jail for a long time. So if you trade in the U.K. then you should have to set up a mechanism for paying the correct taxes here on your profits made here, to support the economy that has provided that wealth, rather than either to another country or at a lower rate elsewhere (USA, Eire, Luxemburgh).

The VAT (value added tax, at a 20% rate) that Peter paid is a large sum but what did he pay for the wood and the shipping? If I bought any wood in the U.K. it would have VAT on it so why not expect it on imported material, something seems strange here. If I bought a new Uke it would have 20% VAT on it too - well provided the business had a big enough turnover to be liable to charge it.

I disagree, its my duty not to pay taxes!

So you know - VAT is like sales tax. Unlike the US it is a universal charge across the EU. In some countries it is less and others it is more and it is not charged on certain items - each country has its own levies and tariffs much like sales tax across the US. If you turn over £85,000 a year in your business (that's turnover, not profit) you have to 'register for VAT', charge it on your goods and collect this charge and pay it to the government , on time, every quarter or get fined. Before you do that, you offset the VAT you have had to pay on your purchases and that is the amount you pay. So it looks like this:

Materials cost for ukulele £300. VAT payed = £52
Ukulele sold for £1495. VAT charged = £249
VAT collected and paid to HMRC: £249 - £52 = £197

So you see, before I put a piece of wood to the tool I am at £998. From this I have to pay rent and utilities, insurance and book-keeper/accountant, travel expenses, account for sundries like sand paper, glue and lacquer....think you can make good money doing this stuff? Wonder why I have so many time saving jigs and tools to cut down the manufacturing time? Unless you have this stuff worked out and understand the underlying costs of being an Artisan you will never make it in this business. Before you start, do the math is my advice to anyone who wants to build ukulele for a LIVING!

Countries with a good welfare system tend to have higher VAT to fund their social care which to me makes sense. Everyone consumes. Contributing TAX here means that State Welfare is more fairly collected and distributed. Collecting it by some other tax (yes we have something called National Insurance - 11% on income on top of an income tax of between 20% and 45% depending on income) is not fair and I can understand how there is a resistance to declaring full turnover (I get cash offers all the time - untraceable because no aper trail ie cheque or credit card receipt). However I pay my taxes and fully declare my income - workshop or jail? No contest.

|I don't mind paying VAT and I do not turn over enough to collect it so am not registered - every small business I know who collects and pays VAT to the HMRC because their turnover is greater than £84K sets aside a day a month to fill out the paperwork or pays someone to do this.

I started this post just to hi light how challenging it is for anyone to make this business pay. The high cost of koa, the exorbitant shipping costs ($238 for this particular package of 14 sets) and the underlying costs of running a full-time professional shop as I do make it a real squeeze earning a decent standard of living. Though I understand from my news feed if I was a teacher in Wisconsin I would need to take on another 5 jobs to make ends meet but only one if employed by the state of Texas!

Hard times folks. Hard times.

I’m curious how taxes are handled in the UK versus the US. We pay income tax, property taxes, and various sales taxes. In some cases, people will work until June until they (theoretically) earn a dollar that doesn’t go the national, state, and local governments. And things are often double taxed over time; every time you buy a car, you pay taxes, and when you sell that car, the next buyer will pay taxes again on something that already had taxes paid for. Some states do not have an income tax (most do).

Once a year, you settle up with the governments and file any deductions—and you either pay more or get some back.

What is the tax situation like in the UK? Do you pay all these taxes in the same ways?

One other note: I live in Wisconsin and teach across the border in Minnesota, and for my combined levels of education and experience (PhD and 22 years experience), I would make $30,000 less per year in most Wisconsin schools than I do in Minnesota—but I do work within the larger metro area of Minneapolis/St. Paul (higher salaries), but we are at the bottom end of salaries in that same area. Outside of the Twin Cities, my pay would be easily $25,000 less per year.

Taxes are the same everywhere. I pay my tax in two portions a year based on the previous year's profits. If I was employed I'd pay it monthly or weekly on my annual salary/weekly earnings. Then there is National Insurance - an additional tax that is supposed to support our state welfare system but most of it goes on defence. There are local 'property' taxes and then there is the unofficial voluntary tax of 'the lottery' where people without money invest in an impossible get rich quick scheme that rarely, if ever, pays out....

Teaching is the noblest profession, least rewarded. I used to do it but the long hours and unremitting barrage of government interference here in the UK soon took the shine off it for me! I'd rather be poor and appreciated than comfortable and harassed.