Types of Taxation in the UK

There are different types of taxation in the UK depending on whether you are employed, in which case you are taxed on a pay as you earn basis, self-employed, or running a business. Within the broader spectrum of taxation, there are deductions from earnings, and value added tax or vat that is charged on certain goods and services.

In the UK beside’s the company owner’s personal taxation, he or she also has to pay corporation tax, which is an extra tax on business. Everything employment and earnings related is taxed in the UK and the system for taxing company benefits is quite complicated as it is being continually updated.

If your parents were wealthy or have managed to save more than a certain amount, then when they pass on you could be subject to inheritance tax – that is to say a tax on any benefits you may have accrued, over a certain amount, as a result of your parents’ demise. Everyone pays the basic rate of tax once they earn over a hundred pounds a week, those who earn more than a specified figure will pay a higher rate of tax than most ordinary workers.

Taxation Systems

In the contemporary world taxation is taken in money but in earlier times, taxation was taken in kind i.e. sheep, crops, cloth or precious stones. The subject of tax is highly controversial and many citizens think that those in power take too much tax and spend it on the wrong things, such as making war. Different countries have different taxation systems and different names for the office responsible for collecting tax. In the UK it is the Inland Revenue, in the US the IRS and in Canada the Canada Revenue Service.

Most taxation bodies have the power to take civil action against those people who do not pay their taxes. In some cases powers extend even further, as they do with the IRS and non-payers can face a jail sentence. Taxes fund things such as roads, law and order, public buildings, public transport systems and to some extent (particularly in the UK) schools and health services. Taxes also pay for public utilities such as waste management, energy and social and welfare services. Government ministers are paid via the taxation system and public bodies such as Department for Social Security and Work and Pensions are all funded, primarily by taxes.