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UK Taxation System - Essay Example
This essay is designed in such a way that it gives an overview of the System of Taxation that is being followed in the United Kingdom (UK). The paper starts with a brief introduction about the overall tax system followed in the United Kingdom, explains different types of direct and indirect taxes and then focuses on describing the changes that have been taking place over the past 25 years with reference to different factors like equity, efficiency and incentives to work…
Alongside, the developments in the indirect taxation are also described.
Income Tax is believed to be the largest source of earning equating up to 30% of the total tax revenue in UK. This is charged on salaries from employment, on rental income for let-out properties, on bank and building societies' interests and on company dividends.
The one that comes next in this list is the Value Added Tax (VAT). VAT is charged to the customer by businesses on the supply of goods and services in the country. The revenue generated by the UK government by way of VAT comes somewhere around to 23% of the total tax revenue and also this is believed to be the second largest earner of revenue to the government.
Apart from this the government of UK also generates revenue through some other kinds of taxes like the National Insurance Contributions (NIC), duties and Corporations Tax, the contribution of which are believed to be 21%, 16% and 8% respectively. ...