How does the tax system work in the UK?
Discussion
I recently received my tax return for last year and was a bit shocked by the results. This is in France BTW. Two questions:
1)In this country the tax you pay on a previous year is included in your gross taxable for the current year. For example you remove travelling expenses as tax deductable right? But the thirty odd thousand Euros you have to pay in tax on last years income is NOT removed. So you are effectively taxed twice. Does it happen like that in the UK?
2) SHit. I forgot what the second one was.
1)In this country the tax you pay on a previous year is included in your gross taxable for the current year. For example you remove travelling expenses as tax deductable right? But the thirty odd thousand Euros you have to pay in tax on last years income is NOT removed. So you are effectively taxed twice. Does it happen like that in the UK?
2) SHit. I forgot what the second one was.
Lambochick said:
No we get taxed 3 or 4 times! We get taxed when we earn it; we get taxed if we save; we get taxed when we spend it and we get taxed if we die and leave any money lying around.
Do you have a Lambo? Or just like them? Either way, you are going to be taxed to death...as are we all...
Taxed to death, sounds almost kinky 
You have different tax rates for different types of income. There's Schedule A, Schedule D case I, Schedule D case II, Schedule E and others. Most people will be Schedule D or E, and if you have property its Schedule A.
Anyway, the tax rates are 10%, 22% and 40% for earned income, 10%, 20% and 40% on savings income, and 10%, 10%, 32.5% for dividends.
All those are within the following bands
5035 is personal allowance, no tax.
0 to 2090 lower tax rate (10% tax rate for earned, savings, dividends)
2091 to 32400 basic rate (22% earned, 20% savings, 10% dividends)
above higher rate (40% earned, 40% savings, 32.5% dividends)
Calculate your tax by taking your income, reducing the P.A. and then tax the income band at the relevant tax rate.
Then you've also got national insurance to contend with, but thats more complicated depending on whether you are an employee or shareholder, or self employed.
Hope that helps.
Have a look at the Inland Revenue website for more details.
Anyway, the tax rates are 10%, 22% and 40% for earned income, 10%, 20% and 40% on savings income, and 10%, 10%, 32.5% for dividends.
All those are within the following bands
5035 is personal allowance, no tax.
0 to 2090 lower tax rate (10% tax rate for earned, savings, dividends)
2091 to 32400 basic rate (22% earned, 20% savings, 10% dividends)
above higher rate (40% earned, 40% savings, 32.5% dividends)
Calculate your tax by taking your income, reducing the P.A. and then tax the income band at the relevant tax rate.
Then you've also got national insurance to contend with, but thats more complicated depending on whether you are an employee or shareholder, or self employed.
Hope that helps.
Have a look at the Inland Revenue website for more details.
Well I suppose my gross salary is in the farcical region of 1650 a month. Nett is around 1220. So that's income tax and national insurance taken care of.
Then there's VAT - 17.5% of anything you buy (with a few exceptions that make little difference).
Then there's fuel duty: about £2.80 of every £3.80 gallon IIRC.
Insurance tax: 8% of your car insurance, house insurance etc.
Road tax (sorry, vehicle excise duty, a tax for driving a car in the first place) £150 a year.
TV tax - sorry, television licence: paying for something you don't want, don't need yet get persecuted for.
Airport tax: the rest of the world has it (since they don't have a lot of other taxes, to be fair), why not have it here as well
Fancy working overtime? No sweat: pay tax on that - at a higher rate than normal salary.
Inherit a house? Cough up.
Die? Yep, they'll have some of that as well, even though you paid taxes on it all your
life.
And the whole system is administered by the biggest bunch of w*nkers alive - the Government that is, not the Inland Revenue. They're only doing their job, and they pay tax like the rest of us...
Editeded for typo's...
>> Edited by wedg1e on Saturday 4th February 23:01
Then there's VAT - 17.5% of anything you buy (with a few exceptions that make little difference).
Then there's fuel duty: about £2.80 of every £3.80 gallon IIRC.
Insurance tax: 8% of your car insurance, house insurance etc.
Road tax (sorry, vehicle excise duty, a tax for driving a car in the first place) £150 a year.
TV tax - sorry, television licence: paying for something you don't want, don't need yet get persecuted for.
Airport tax: the rest of the world has it (since they don't have a lot of other taxes, to be fair), why not have it here as well
Fancy working overtime? No sweat: pay tax on that - at a higher rate than normal salary.
Inherit a house? Cough up.
Die? Yep, they'll have some of that as well, even though you paid taxes on it all your
life. And the whole system is administered by the biggest bunch of w*nkers alive - the Government that is, not the Inland Revenue. They're only doing their job, and they pay tax like the rest of us...
Editeded for typo's...
>> Edited by wedg1e on Saturday 4th February 23:01
OK, there is direct tax and then there is indirect tax. Its all tax but its levied in different ways.
Direct tax
..is tax you pay directly out of your earnings.
If you are salaried, your tax gets taken off you before you even get the money - you never see your gross salary.
If you are self employed, or have a company, you collect money gross and after some careful planning, tax and otherwise, you pay tax according to the type of income at the appropriate rate.
Indirect tax
This is a tax on things you buy, includes duties and VAT. Most obvious is the duties on fuel and VAT on most things you buy.
The self employed can get some VAT back by becoming VAT registered. (you charge your clients VAT - you act as a collection agent for HM Revenue & Customs, but before you pay it over to them, you get to deduct the VAT on your business expenses).
You also pay tax when you buy property (stamp duty), when you inherit somet (inheritance tax), also pay national insurance (employed people pay different classes of NI than self employed).
Basically we pay an awful lot of tax...the country apparently costs that much to run...we use a horrible amount of that money to give handouts to the needy (which is very welcome) and those who know how to play the system (by claiming illegally, working on the side, claiming they're divorced, going cap in hand and living off the state) - all of which is not so welcome.
Cheers!
Direct tax
..is tax you pay directly out of your earnings.
If you are salaried, your tax gets taken off you before you even get the money - you never see your gross salary.
If you are self employed, or have a company, you collect money gross and after some careful planning, tax and otherwise, you pay tax according to the type of income at the appropriate rate.
Indirect tax
This is a tax on things you buy, includes duties and VAT. Most obvious is the duties on fuel and VAT on most things you buy.
The self employed can get some VAT back by becoming VAT registered. (you charge your clients VAT - you act as a collection agent for HM Revenue & Customs, but before you pay it over to them, you get to deduct the VAT on your business expenses).
You also pay tax when you buy property (stamp duty), when you inherit somet (inheritance tax), also pay national insurance (employed people pay different classes of NI than self employed).
Basically we pay an awful lot of tax...the country apparently costs that much to run...we use a horrible amount of that money to give handouts to the needy (which is very welcome) and those who know how to play the system (by claiming illegally, working on the side, claiming they're divorced, going cap in hand and living off the state) - all of which is not so welcome.
Cheers!
how does it work? well you bend over, drop your trousers, hand the lube over to gordy and you have yourself a good old time. if you are thinking of coming here purely for tax reasons, one word - dont. to be fair our tax system is simpler than yours, and we do probably pay less overall, but we have countless taxes that really do screw you and they arent obvious until you fall victim to them time and time again as one pound coin gets taxed about 4 times as it passes through your hands. the most prominent thing that gets me, and is something you can probably gather gets everyone from reading around this site, is that whatever tax we do pay is so comprehensively wasted by our government
you might want to read this, a brief summary of taxes in the EU, PDF document:
http://europa.eu.int/comm/taxation_customs/resources
>> Edited by paulhol on Saturday 4th February 21:35
you might want to read this, a brief summary of taxes in the EU, PDF document:
http://europa.eu.int/comm/taxation_customs/resources
>> Edited by paulhol on Saturday 4th February 21:35
What I don't get is that everyone, where ever you go, complains about these taxes, me included. And yet we are the ones voting for the government. (BTW ministers over here have 65% tax rtelief on what they earn).
In 2004 for every 10 Euros I earned, I was left with 1.8 after paying taxes and charges. I mean what's the feckin' point?
In 2004 for every 10 Euros I earned, I was left with 1.8 after paying taxes and charges. I mean what's the feckin' point?
driller said:
What I don't get is that everyone, where ever you go, complains about these taxes, me included. And yet we are the ones voting for the government. (BTW ministers over here have 65% tax rtelief on what they earn).
In 2004 for every 10 Euros I earned, I was left with 1.8 after paying taxes and charges. I mean what's the feckin' point?
here its the government catering to the proles that keeps them in power. the majority of affluent and self sufficient people didnt vote for them
driller said:
What I don't get is that everyone, where ever you go, complains about these taxes, me included. And yet we are the ones voting for the government. (BTW ministers over here have 65% tax rtelief on what they earn).
In 2004 for every 10 Euros I earned, I was left with 1.8 after paying taxes and charges. I mean what's the feckin' point?
The point is that if you got rich, you'd be a threat to those that want to keep you poor.
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