Manual home
0.1What this manual covers
This is a manual about how money and tax actually work: what the main taxes are levied on and why they exist, how tax systems arrived at their present shape, how a small business keeps its books, how tax years and filing cycles are structured, and how to read a set of accounts without taking the totals on trust. It is written for people who keep meeting these words and would like them to stop being vague.
The nine chapters build on each other. The first four explain taxation as a system; the next three explain the records that produce the figures a tax system asks for; the last two explain the statements those records lead to and how to question them. Every chapter can also be read on its own, and the glossary defines each term in one line and points back to the chapter that works it through.
Two deliberate omissions are worth stating plainly. This manual gives no rates, thresholds, deadlines or filing requirements, because those differ by place and change every year, and a number quoted out of context is worse than no number. And it is explanatory only: it describes mechanisms and history, not what any particular person or business should do.
0.2Start here
- Start at the beginning — Chapter 1, What taxes are for The four jobs a tax system is asked to do, and why they conflict. Read straight through from here.
- If you want the bookkeeping — Chapter 5, Bookkeeping basics What a set of books is for, the record trail, and why double entry checks itself.
- If you have accounts in front of you — Chapter 8, Reading a set of accounts The three statements, what each one answers, and how they tie together.
- If a word is in the way — the glossary Every term used in the manual, defined in one line, with the chapter that explains it.
0.3Procedures and reference
The manual uses two recurring formats, shown here so the chapters read predictably. Procedures are numbered steps meant to be followed in order; reference material is set as definition tables meant to be consulted rather than read. This is the month-end routine from Chapter 7, abbreviated:
- Gather the source documents for the period: invoices issued and received, statements, and any record of cash.
- Enter sales and purchases once each, with any tax kept separate from the net amount.
- Reconcile the bank, and treat whatever is left over as a question rather than a rounding item.
- Post the adjustments so that costs and income sit in the period they belong to.
- Take a trial balance and compare each line with the month before.
And this is the reference format, using the tax families set out in Chapter 2:
| Family | What it is levied on | Who normally hands the money over | Who is likely to bear it |
|---|---|---|---|
| Income tax | Earnings, profits and returns received by a person over a period | The earner, or an employer deducting before payment | The person whose income it is |
| Payroll or social contributions | Wages, usually split between employer and employee | The employer | Largely the employee, through lower wages over time |
| Consumption tax | Spending, either at the final sale or at each stage of production | The seller | The buyer, in the price |
| Property tax | The value or rental worth of land and buildings | The owner or occupier | Owners of the land, whose asset is worth less because of the charge |
| Transaction tax | A specific act: a sale of shares, a transfer of title, a document | The party completing the act | Usually the buyer, sometimes split by market practice |
| Wealth-transfer tax | Gifts and estates passing from one person to another | The estate or the recipient | The people who would otherwise have received the transfer |
0.4How the manual is arranged
Chapters are numbered and grouped: Taxation (1 to 4), Keeping records (5 to 7) and Reading accounts (8 and 9), followed by the reference glossary. Every page carries the chapter tree, a breadcrumb showing where you are, and a movement strip at the foot linking the chapters either side. The full list with scope lines is on the contents page.
Figures are numbered and captioned, and the worked examples use round illustrative numbers chosen so that the arithmetic can be followed in your head. They are teaching figures, not observations of any real business.
To read the manual in order, begin with Chapter 1, What taxes are for, and follow the next link at the foot of each page.