Why is the income tax so high in UK?
- Author Km Benjamin
- Published May 6, 2018
- Word count 599
Taxes are one of the major sources of revenue to the government. In fact, not a single government has its own money. In order to fund security, education, health, and infrastructural projects, the UK government depends on a number of sources, including individual income taxes, social insurance taxes, corporate income taxes, estate, excise, and gift taxes.
Do you think the UK income tax is so high? Not really. However, it is not easy to directly compare taxation between countries due to varying tax credit circumstances. In the UK for instance, income tax is progressive. This implies that the amount of tax you pay increases with increase in the taxable income. In addition, the total income tax an individual is required to remit annually depends on:
• How much personal income exceeds personal allowance
• How much of the personal income falls in various tax bands
The current rates according to each tax band for the fiscal year 2018/2019 for individuals who are entitled to the standard personal allowance of up to £11,850 are as follows:
Those who earn between £11,851 and £46,350 fall in the basic tax rate category. They are required to pay 20 percent of their taxable income.
Individuals earning between £46,351 and £150,000 fall in the higher rate tax category. Their income tax rate is 40 percent of the total taxable income.
Taxpayers who earn over £150,000 are classified in the additional rate band. These fellows remit 45 percent of their taxable income as income tax. It is, however, important to note that you are not eligible for personal allowance if your taxable exceeds £123,700.
Reduced Income Tax
There are a number of circumstances under which UK residents are entitled to lesser income tax. These circumstances allow you to claim income tax relief from HMRC, only if you are eligible. A good example is when you are married or you’ve entered into a civil partnership and your income is below the standard personal allowance. Here, you are eligible to claim Marriage Allowance. If you choose not to claim Marriage Allowance and either of you was born before 6 April 1935, you are eligible for Married Couple’s Allowance.
Personal Tax in the UK Compared To Other Advanced Countries
Do you really want to know whether Britons pay more compared to other developed countries? Of course, you do. In order to make it clear, let’s look at the Guardian Money’s report on income taxes paid by UK residents earning £25,000, £40,000 and £100,000 compared to Australia, other European countries, and the US.
According to their survey, Britons earning £25,000 and £40,000 are subjected to the lowest tax rates comparatively. In addition, the UK residents who earn £100,000 have less of their total income channeled to tax than the rest of European countries.
The Guardian Money report further explains that after personal allowances, national insurance, and income tax are considered, Britons earning £100,000 contribute 34.3 percent of the amount to HMRC. The percentage, according to the survey, is almost the same with that in Australia, Spain, and the US. However, the figure is far much behind that of Germany, Ireland, Sweden, and France at 38%, 41%, 45%, and 59% respectively.
Generally, low-income earners in the UK benefit from a tax-free personal allowance that is higher than that of many countries. Income taxes for higher earners are at par with that of Australia, US, and Spain But much less to that of Ireland, Sweden, and France.
Are you or your business struggling with matters of taxation? Contact us to find a cheap accountant in the UK. At WeAccountax, we offer unique taxation services for individual and businesses through our experienced accounting experts. Call us today and we will be glad to help you.
K Benjamin is a Professional Accountant and Writer. He loves to write articles about Business and Finance. Currently, He working with Weaccountax as Accountant.Visit this page to see How Weaccountax Works.Article source: https://articlebiz.com
There are no posted comments.
- VAT penalties – New rules
- TAX-FREE STRATEGIES IN AN UNCERTAIN ECONOMY
- 2022 Energy crisis and failure to connect Reality.
- When Are Corporate and Personal Taxes Due in Canada in 2021?
- You Would Never Have Thought That Having Accounting Internship Could Be So Beneficial
- ACTIVATION OF UAN
- Focal motivations behind getting a Tax direct for Small Business Firms
- Avoiding the flood — tax issues with water rights in agribusiness
- Social security benefits for a family (COVID-19)
- How to use QuickBooks Component Repair Tool?
- Do you want to reduce your taxes for next year?
- Will you be responsible with your tax refund?
- Getting started with QuickBooks Enhanced Payroll in Brief
- Are DSTs Right For Your 1031 Exchange
- Tax Return Makeovers By Kenya Woodard
- Why have all crypto tax attempts failed?
- Are You a Corporation? Know Why Consulting a Tax Accountant Is Vital
- Share capital or share premium for your Dutch company?
- Everything investors should know about 1031 sponsors
- Should I do my own tax return?
- Get More Money Back on Your Tax Return with help from the Tax Cuts and Jobs Act
- Don’t Fall Victim to these 3 Tax Scams in 2018
- Find Out If 72(T) Penalty Free Income Is a Solution for You
- 20 Things You Should Know About The New Tax Laws
- 4 Key Reasons Why Payroll Is Necessary Within A Business
- Accounting for doctors and GP's: Basic advice & guidance
- What is Cryptocurrency and Do I Have to Claim it on My Taxes?
- Here's Why Small Businesses Should Tap Bookkeeping Services
- Tax Tips for Teachers 2018