Taxation in the United Kingdom

U.K.-Tax-Revenues-As-GDP-Percentage-(75-05)

UK_taxes

UK_income_tax_and_National_Insurance_charges_(2016–17)

Percentage_IT_and_NI_and_Marginal_Taxrate

UK_income_percentiles

UKExpenditure

UK_Corp_tax

Taxation in the United Kingdom

Taxation in the United Kingdom refers to the system of taxes levied on individuals and businesses by the Government of the United Kingdom. The UK tax system is administered by Her Majesty's Revenue and Customs (HMRC). The primary sources of tax revenue include income tax, National Insurance, value-added tax (VAT), corporation tax, and excise duties.

History

The history of taxation in the United Kingdom dates back to the Anglo-Saxon period, with significant developments occurring during the Norman Conquest and the establishment of the Exchequer in the 12th century. The modern tax system began to take shape in the 19th century with the introduction of income tax by William Pitt the Younger in 1799 to fund the Napoleonic Wars.

Types of Taxes

Income Tax

Income tax is a tax on the income of individuals and is one of the largest sources of revenue for the UK government. It is a progressive tax, meaning that the rate of tax increases as income increases. The rates and thresholds are set annually by the Chancellor of the Exchequer in the Budget.

National Insurance

National Insurance contributions are paid by employees, employers, and the self-employed. These contributions fund various social security benefits, including the State Pension and National Health Service (NHS).

Value-Added Tax (VAT)

Value-added tax (VAT) is a consumption tax levied on the sale of goods and services. The standard rate is currently 20%, with reduced rates for certain goods and services.

Corporation Tax

Corporation tax is levied on the profits of companies. The rate of corporation tax is set by the government and can vary depending on the size and type of business.

Excise Duties

Excise duties are taxes on specific goods, such as alcohol, tobacco, and fuel. These duties are intended to reduce consumption of these goods and generate revenue for the government.

Administration

The administration of taxes in the UK is the responsibility of Her Majesty's Revenue and Customs (HMRC). HMRC is responsible for the collection of taxes, enforcement of tax laws, and provision of tax-related services to the public.

Tax Evasion and Avoidance

Tax evasion and avoidance are significant issues in the UK. Tax evasion is illegal and involves deliberately misrepresenting or concealing information to reduce tax liability. Tax avoidance, while legal, involves using loopholes and legal strategies to minimize tax payments. The UK government has introduced various measures to combat both practices, including the General Anti-Abuse Rule (GAAR).

Related Pages

• Her Majesty's Revenue and Customs
• Income tax
• National Insurance
• Value-added tax
• Corporation tax
• Excise duties
• Chancellor of the Exchequer
• Budget
• State Pension
• National Health Service
• Tax evasion
• Tax avoidance
• General Anti-Abuse Rule