Jaydip Pravinkumar Unit 38 P4 M2
Unit 38 P4 M2 – Explain how fiscal and monetary policy decisions have affected a selected
business.
The fiscal policy is policy that allows a government to increase its tax rates and spending
levels to help the economy grow. This policy decreases the unemployment and also controls
the inflation by lowering the tax rates to increase economic growth. Fiscal policy influences
in government borrowing from banks and the rates of debt. If the UK government increase
tax they will be able to squeeze out money from the economy. Fiscal policy will affect the
business like JD sports because they will also have to pay income tax every year in order for
the government to raise revenue and also enables it to discourage various activities and to
encourage other people who are suffering from low rates in tax and subsides. Taxation
affects JD sports when they make their profit.
1. National insurance - This is a tax that involves heavily on a business’s income.
National insurance contributions are funded for the ill and unemployed and it is later
paid in state pensions. National insurance contributions are made through income
taxes & payrolls. This benefits government spending because the government can
spend more money on public services for customers. Contributions are unlimited as
they are removed from upper income levels allowing the process of the
contributions to function successfully. The current rate for the contributions below
£113 (lower earnings unit) is 0%. The current rate for the contributions by £113-
£157 (primary threshold) is 0%. The current rate for the contributions by £157-£866
(upper earnings unit) is 12%. The current rate for the contributions above £866 is
2%. National insurance contributions impacts on JD sports because JD sports can
invest more money in their business. However if the nation insurance contribution is
high which will mean that the customers will not have money to spend on JD sports,
and this will mean that they will not be able to afford JD sports products which sales
and profit will decrease for the business.
2. Corporation tax - This is a tax on company profits that they earn. This applies mostly
on their operating earnings and expenses such as vehicles, repayment of loans, office
equipment such as pens, pencils, desks and computers. Many businesses tend to
pay their corporation taxes at smaller amounts to be able to reinvestment more in
their businesses at a later time. Taxable profits that associate with corporation tax
are trading profits and investment profits which both of them are linked to
businesses’ taxable income. The current corporation tax rate for businesses in 2017
is 19% for all profit. The rise in corporation tax increases inflation. Corporation tax
impacts on JD sports because demand and sales will decrease due to the increase of
prices.
3. VAT - This is a tax that is charges on the goods and services produced by businesses
in the UK. VATs are also added to goods and services that are produced in the
Unit 38 P4 M2 – Explain how fiscal and monetary policy decisions have affected a selected
business.
The fiscal policy is policy that allows a government to increase its tax rates and spending
levels to help the economy grow. This policy decreases the unemployment and also controls
the inflation by lowering the tax rates to increase economic growth. Fiscal policy influences
in government borrowing from banks and the rates of debt. If the UK government increase
tax they will be able to squeeze out money from the economy. Fiscal policy will affect the
business like JD sports because they will also have to pay income tax every year in order for
the government to raise revenue and also enables it to discourage various activities and to
encourage other people who are suffering from low rates in tax and subsides. Taxation
affects JD sports when they make their profit.
1. National insurance - This is a tax that involves heavily on a business’s income.
National insurance contributions are funded for the ill and unemployed and it is later
paid in state pensions. National insurance contributions are made through income
taxes & payrolls. This benefits government spending because the government can
spend more money on public services for customers. Contributions are unlimited as
they are removed from upper income levels allowing the process of the
contributions to function successfully. The current rate for the contributions below
£113 (lower earnings unit) is 0%. The current rate for the contributions by £113-
£157 (primary threshold) is 0%. The current rate for the contributions by £157-£866
(upper earnings unit) is 12%. The current rate for the contributions above £866 is
2%. National insurance contributions impacts on JD sports because JD sports can
invest more money in their business. However if the nation insurance contribution is
high which will mean that the customers will not have money to spend on JD sports,
and this will mean that they will not be able to afford JD sports products which sales
and profit will decrease for the business.
2. Corporation tax - This is a tax on company profits that they earn. This applies mostly
on their operating earnings and expenses such as vehicles, repayment of loans, office
equipment such as pens, pencils, desks and computers. Many businesses tend to
pay their corporation taxes at smaller amounts to be able to reinvestment more in
their businesses at a later time. Taxable profits that associate with corporation tax
are trading profits and investment profits which both of them are linked to
businesses’ taxable income. The current corporation tax rate for businesses in 2017
is 19% for all profit. The rise in corporation tax increases inflation. Corporation tax
impacts on JD sports because demand and sales will decrease due to the increase of
prices.
3. VAT - This is a tax that is charges on the goods and services produced by businesses
in the UK. VATs are also added to goods and services that are produced in the
