Council Tax

[Neil Williams]

On Thursday 10 March 2005 12:29 am, Tom Haskins-Vaughan wrote:
> But surely it's only a monthly payment if you pay monthly by direct
> debit. You are liable for the full amount whether you pay a lump sum or
> monthly.

Annual or monthly, it's still an expense. How do you record your car tax? Your 
Income Tax? You don't owe income tax until you receive income. You aren't 
borrowing money from the government and then having to pay it back.

You are not liable for the full payment under any and all circumstances - your 
estate is not billed for council tax when you die! Your true liabilities will 
be deducted from your estate - your loans, credit agreements and mortgage.

When someone dies, their liability for Council Tax ceases at the time of 
death. Their liability for their credit card balances, mortgage and any bank 
loans does NOT cease - it is transferred to their estate. Now if the tax is 
unpaid, then arrears can be collected, as with income tax and VAT, but if you 
are fully paid up (whether monthly or annually), you may get a refund to your 
estate. Note that these are arrears - when you are in arrears with any agreed 
expenditure, those arrears (but only the amount of the arrears) ARE a 
liability, independent of the nature of the expense itself.

You spend money on Council Tax as you use the services of the council. You are 
paying a tax that contributes to the costs of lighting, police, waste, etc. 
etc. If you choose to pay annually, you are just giving the council the 
privilege of earning interest on your money when it could be earning interest 
for you! Provided there is no credit charge for monthly payments, it is 
always advisable to pay monthly. Few people receive their entire annual 
income as one payment.

The crucial point comes down the refund during the life of the payment. The 
payment covers 12 months. If circumstances change, you can get a refund. This 
means you are paying for a service as you consume. It's a pay-as-you-go 
tariff. Whether you pay annually or monthly, you are paying for ongoing 
services.

> Therefore, you incur a liability on the first of April each 
> year. If you move house, you will be given a refund. That's how I'm
> seeing it.

So it's an expense. You spend out money and if things change, you can (in 
certain circumstances) get a partial refund. 

>
> Mike wrote:
> > --- Jean-David Beyer <jdbeyer at exit109.com> wrote:
> >>I do not think of Liability as you do.

Think of liability as if you were the Executor of the estate. What MUST the 
estate pay AFTER death. That is a liability. If the item ceases to be payable 
after death (barring arrears), then it is an expense - a charge during life.

Liabilities are with you (your estate) beyond the grave. 
Expenses stop at the crematorium gate!

> >>For me, it is a known expense (e.g., for merchandise received, or
> >> services rendered) that need not be paid all at once in the near future
> >> (so is not accounts payable). An insurance bill that you may elect to
> >> pay all at once, but have the option to pay quarterly, might be a
> >> liability.

If you sell the insured item during the life of the policy, the element of 
future payments that is NOT eligible for a refund is a credit charge (APR) 
and just another expense. The element that is refunded is also an expense.

> >> You could argue that that is money you borrowed, but I would 
> >> not.

I wouldn't either, you haven't borrowed any money from the Council to have to 
pay it back. You have no Council Tax Debt until you are in arrears.

> > But I can always move out of my home or cancel my insurance. That still
> > leaves it as a fixed monthly expense in my books. Having lived in other
> > countries, I've found it's a UK peculiarity to make insurance and council
> > tax conceptually a 'yearly' thing, even though it still remains a monthly
> > payment. Cheers

It does make more sense as a monthly thing. It's an ongoing expense, it is of 
indefinite duration, it is modifiable and conditional on circumstance. 
Whether or not the particular item is mandatory under law, the item itself is 
still an expense.

-- 

Neil Williams
=============
http://www.dcglug.org.uk/
http://www.nosoftwarepatents.com/
http://sourceforge.net/projects/isbnsearch/
http://www.neil.williamsleesmill.me.uk/
http://www.biglumber.com/x/web?qs=0x8801094A28BCB3E3

-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: application/pgp-signature
Size: 189 bytes
Desc: not available
Url : http://lists.gnucash.org/pipermail/gnucash-user/attachments/20050310/cce70955/attachment.bin