Fiscal

A simple, systematic tax liability calculator

Fiscal is a simple, systematic tax calculator with soft-coded rate bands. Specifically, Fiscal aims to side-step the commonly-seen behaviour of using 'if' statements in tax calculators, and relying on hard-coded tax bands.

Fiscal, broken down

There are two key elements to Fiscal.

1. Bands - a stream of pairwise tuples (a threshold, a percentage) with an 'allocator'. The allocator dictates the manner in which taxable amounts are allocated between the threshold element of each band - the two predominant forms of allocator are provided:

   • 'step', which reflects the most common allocation; and
   • 'slab', which represents taxes for which the sole applicable rate is determined by the taxable amount (as in old stamp duty and early SDLT).

2. Liabilities - a calculation of liability stored in a 'breakdown' - a three-element tuple made up of:

   • the amount allocated to the band;
   • the percentage referable to that band; and
   • the product of the amount and the percentage.

Allocators - examples

To draw an example from Stamp Duty Land Tax (SDLT), a land transfer tax in England (and previously throughout the UK).

SDLT - stepped calculation

The applicable bands for a commercial transaction were, after 17 March 2017, as follows:

Threshold	Percentage
£150,000	0%
£100,000	2%
Surplus	5%

This can be represented by a band as follows:

stepped_bands = SteppedBands(((150_000, 0),(100_000, 2),("Infinity", 5)))

The bands are allocated on the step basis, so £1m would be allocated as follows:

Threshold	Percentage	Liability
£150,000	0%	£0
£100,000	2%	£2,000
£750,000	5%	£37,500

allocation = stepped_bands.allocate(1_000_000)
assert allocation == (
    (Decimal("150000"), Decimal("0")),
    (Decimal("100000"), Decimal("2")),
    (Decimal("750000"), Decimal("5")),
) # True

The allocation is intended to be called within an instance of the Liability object.

SDLT - slabbed calculation

Prior to 17 March 2017, the applicable SDLT rates for a commercial transaction were as follows:

Threshold	Percentage
£150,000	0%
£100,000	1%
£250,000	3%
Surplus	4%

The bands were allocated on the 'slab' basis. This means that the taxable amount is compared with the cumulative thresholds, which are as follows:

Cumulative Threshold	Percentage
£150,000	0%
£250,000	1%
£500,000	3%
Surplus	4%

The first cumulative threshold to equal or exceed the taxable amount determines the applicable percentage. So where the taxable amount was £200,000, the applicable percentage was 1%.

Cumulative Threshold	Amount	Percentage
£150,000		0%
£250,000	£200,000	1%
£500,000		3%
Surplus		4%

Where the taxable amount was £300,000, the applicable percentage was 3%.

Cumulative Threshold	Amount	Percentage
£150,000		0%
£250,000		1%
£500,000	£300,000	3%
Surplus		4%

Thresholds were inclusive, so where the taxable amount was £500,000, the applicable percentage was still 3%.

Cumulative Threshold	Amount	Percentage
£150,000		0%
£250,000		1%
£500,000	£500,000	3%
Surplus		4%

But where the taxable amount was £500,001, the applicable percentage was 4%.

Cumulative Threshold	Amount	Percentage
£150,000		0%
£250,000		1%
£500,000		3%
Surplus	£500,001	4%

Liabilities - examples

Liabilities represent the calculation the follows the allocation of a taxable amount into the correct bands.

Those liabilities are then aggregated into a total liability. So by way of example, if calculating the current (9 February 2022) SDLT liability (non-residential property) for a £1m sum, the steps would be as follows.

bands = SteppedBands((150_000, 0),(100_000, 2),("Infinity", 5))
liab = Liability(bands=bands, amount=1_000_000)

The breakdown of liability would look as below:

assert liab.breakdown == (
        (Decimal("150000"), Decimal("0"), Decimal("0")),
        (Decimal("100000"), Decimal("2"), Decimal("2000")),
        (Decimal("750000"), Decimal("5"), Decimal("37500")),
    ) # True
assert liab.total == Decimal("39500") # True