Tax is applicable in the UK for individuals and companies. While individuals are taxed heavily irrespective of their income and social standing, companies enjoy reliefs so that business enterprises envisage growth and expansion.
In UK tax on income is called Income tax…
There are certain types of income that do not attract tax. They are benefits, income from tax exempt accounts and special pensions. Residents of UK are eligible for tax free allowance called personal allowance, which is an amount of taxable income which the resident is allowed to earn each year. This allowance is free of tax. For the year 2008-2009, the tax free amount is fixed at '5,435. If the individual is over the age of sixty five, this amount is likely to increase. A registered blind person can claim tax free blind person's allowance. Income tax is applicable on taxable income after the tax free allowances. Certain deductible reliefs and allowance will reduce the tax bill of an individual. Some of the deductible allowances are married couple allowance, maintenance payment relief, and tax relief on pension, donations to charity based on gift aid or payroll giving. There are some other amounts which can be reduced from the tax bill. They are allowance that decrease tax in retirement, tax advantages of personal pension and offers to charity (Income Tax, n.d).
The revenue raising methods of the UK government has come to debate with the abolition of 10 percent tax. The 10 percent tax was abolished to simplify the tax system. This is likely to affect the poor household which enjoyed limitations in paying tax. The reduction of tax rate from 22 to 20 percent and the abolition of 10 percent tax are set to affect people whose annual income is less than '18,500. This initiative has raised argument because five million people who fall under the low earning group is targeted to raise more tax revenues. Simplification of tax is appreciable but abolition of 10 percent requires identification of people who fall under the category and necessary benefits should be provided to help them. While families without children would be the worst affect, low income families with children are expected to be in a better position. The tax reform will affect the already high cost of living of poor people (Abolition of 10 p tax, 2008).
The rate of tax efficiency is increasing for taxpayers in the UK. By using the Gift Aid agencies like Intercontinental Church Society can reclaim additional money on the amount. The Government has facilitated these services to charities for a transitional period however in the medium term the amount of reclamation will decrease. Gift Aid can be used with charitable societies by a resident or non resident UK tax payer and in a tax year the individual can pay an amount (from UK income or capital gains) which can be reclaimed by the society. (Intercontinental Church Society. n.d.).
The tax efficient service can be utilized by a higher tax payer by setting off the amount towards charity against the earning and avail tax relief for the difference between standard rate and higher rate for self assessment. This facility can be availed by non UK residents who do work as Crown servants or members of the UK armed forces working abroad if their earning or capital gains chargeable to UK tax is equal to the gross amount of the donation (before reducing the basic rate income tax which is 22 percent for ...
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“UK Taxation System Essay Example | Topics and Well Written Essays - 2250 Words”, n.d. https://studentshare.net/politics/275587-uk-taxation-system-essay.
The author states that ordinary residence indicates a higher degree of permanence when compared to the residence. An individual is considered to be ordinarily resident if residence in the UK is of a habitual nature. Therefore, if that person goes abroad for a period constituting a full tax year the individual is regarded as remaining a resident.
The purpose of this research is to investigate the following: the importance of direct and indirect taxes; differences between direct tax and indirect tax; implications for direct and indirect taxes; progressivity of income tax and corporate tax in UK; tax revenues of UK government in the year 2010 – 2011; income and corporate tax realization and payment; tax competition.
2008). This particular circumstance has led to occurrence and existence of gap between the profits stated for financial purposes and the amount of tax actually paid. There still exist no clear outline as to how extend this is an indicator of avoidance activity is actually tied up with the vexing question of what amounts to tax avoidance and the extent to which tax avoidance is undesirable and unacceptable in general (Wolfgang, et al.
The tax went into effect on April 1, 1965 and is roughly based on the income tax system, following the same fundamental structure, guidelines, and rules. Also according to Wikipedia, "Since 1997, the UK's Tax Law Rewrite Project has been modernizing the UK's tax legislation, starting with income tax, while the legislation imposing corporation tax has itself been amended; the rules governing income tax and corporation tax have thus diverged.
Secondly the tax payer must be sure of what he is going to pay, for what reason, the amount and so on. Thirdly the payment of tax must be convenient to the tax payer. For example, quarterly payment of taxes must be arranged in a manner that the tax payer knows when it is due.
Also the structures of certain taxes are also explained in this essay. Apart from this, some figure with respect to the contribution of the different taxes to the total revenue raised are also indicated wherever necessary. All the figures and different information quoted in this paper are extracted from the survey conducted by the Institute for Fiscal Studies on the UK Tax System for the fiscal year 2006-2007.
closing a crucial loophole within the UK tax system, by presenting a comprehensive analysis of the right direction for the UK tax policy, encompassing specific reforms proposals coupled with suggestions for broad strategic reforms. The current system followed in the UK for
There are many arguments for taxation, but depend with the circumstances at a particular period. In the advent of taxation, the British authority needed revenue to finance the war and management of colonies in the U.S. During the 1930s, the principle
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