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Finance & Accounting
Pages 10 (2510 words)
Running Head: Taxation Taxation [Writer’s Name] [Institute’s Name] Taxation Scope of tax Income Tax The Largest source of revenue collection for government is income tax. Everyone in the country has an income tax personal allowance below which he does not have to pay tax in a particular tax year.
If anyone has an income below the income tax personal allowance, he is not supposed to pay any tax however if the earnings of an individual is above the tax allowance then he is supposed to pay according to his earnings above this level. There are different tax bands and every tax band has a different tax rate (Income Tax Rates and Allowances). Corporation tax Corporation tax refers to the tax on the profits made by the organizations in United Kingdom along with profits made by permanent establishments of companies owned by non-UK residents as well as associations trading in European Union. Collection of corporate tax is the fourth largest source of revenue collection of government. Before April 1965, both the corporate tax rate and individual tax rate were charged at the same rate though corporations were supposed to pay an additional profit tax. However, with the passage of time, there have been several changes to the corporate tax and since 1997, the laws have modified several times and now the tax rates of corporations and individuals have changed (Tax Law Rewrite). Calendar year is a period of 12 months beginning from the starting of January and ending on 31st December whereas on the other hand, fiscal year is a period of 12 consecutive months ending on last day of any month except December (Tax Years). In United Kingdom, government financial year is a period of twelve months from April 1 to March 31. ...
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