The External Environment The Macro-Economic Environment There are a number of economic factors that can affect a business, these include tax rates, interest rates, exchange rates, inflation, employment levels and the general health of the economy. Each of these economic factors will be examined in turn below: Taxation There are several different types of tax payable in the UK: Income tax Value added tax (VAT) Corporation tax Income tax Income tax is a tax on a this form of tax is a statutory deduction from an wages person’s income, employee’s Value added tax (VAT) VAT is a tax on the purchase of goods and services. VAT is charged on most goods and services that consumers purchase (such as trainers and cinema tickets) and on goods and services that businesses purchase (such as accounting services and printer ink). Corporation tax Corporation tax is a tax on company profits, it is paid before shareholders are paid their dividend. Income tax is a statutory deduction from an wages. employee’s What does this mean? The pay employees receive from their employer is after income tax has been taken. What is this pay called? The system for collecting income tax from workers is called PAYE. What are these letters short for?
The External Environment The Macro-Economic Environment There are a number of economic factors that can affect a business, these include tax rates, interest rates, exchange rates, inflation, employment levels and the general health of the economy. Each of these economic factors will be examined in turn below: Taxation There are several different types of tax payable in the UK: Income tax Value added tax (VAT) Corporation tax Income tax Income tax is a tax on a person’s income, this form of tax is a statutory deduction from an employee’s wages Value added tax (VAT) VAT is a tax on the purchase of goods and services. VAT is charged on most goods and services that consumers purchase (such as trainers and cinema tickets) and on goods and services that businesses purchase (such as accounting services and printer ink). Corporation tax Corporation tax is a tax on company profits, it is paid before shareholders are paid their dividend. Income tax is a statutory deduction from an employee’s wages. What does this mean? The pay employees receive from their employer is after income tax has been taken. What is this pay called? The system for collecting income tax from workers is called PAYE. What are these letters short for?
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