5 Extended Diploma in Accounting

5 Extended Diploma in
Accounting

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
Explanation of the nature and purpose of self-assessment tax....................................................4
Determination of taxable amounts and calculation of tax payable for a given scenario.............4
Including a completed self-assessment tax return.......................................................................4
TASK 2............................................................................................................................................5
TASK 3............................................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
In the United Kingdom, taxation may be paid to at least three levels of government: the
central government (Her Majesty's Revenue and Customs), devolved governments, and local
governments. Income tax, NI contributions, VAT, corporate tax, and fuel charge are the main
sources of revenue for the central government. Grants from the federal government, business
rates in England, Council Tax, and, increasingly, fees and levies such as those for on-street
parking, are the main sources of revenue for local governments. Total government income for the
fiscal year 2014–15 was expected to be £648 billion, or 37.7% of GDP, with net taxes and
National Insurance payments totaling £606 billion. Everyone who makes money or works in the
United Kingdom is required to pay UK income tax. In the United Kingdom, around 32 million
individuals pay taxes. Different UK tax regulations, on the other hand, influence how income tax
is collected. Scotland's tax bands differ somewhat from those in England, Wales, and Northern
Ireland. The laws for UK tax residents and non-residents are also varied. Residents must pay
income taxes on their global earnings in the UK, whilst non-residents are only taxed on income
earned in the UK. Income tax is your contribution to the UK government's spending on
transportation, the NHS, and the education system. The wages affect the amount of UK income
tax people pay. In the United Kingdom, HM Revenue and Customs is in charge of income tax
(HMRC).
As the UK's tax, payment, and customs agencies, it taxes both domestic and foreign incomes
of everyone resident in the country. Employment and benefits from the job, profits from one’s
own business, state benefits, pensions, rent, interest from savings, dividends from a trust, and
other sources of income are all possibilities.
HM Revenue and Customs (HMRC) is in charge of tax administration and collection in the
United Kingdom. In 2020/21, the UK's tax collections were estimated to be at £584.5 billion,
down 7.7% from the previous tax year.
Income taxes, property taxes, capital gains taxes, UK inheritance taxes, and VAT are all
examples of basic UK taxes. Many of them are progressive taxes, which means that individuals
with higher earnings pay more.
England, Scotland (though there are some special distinctions due to Scotland's distinctive
legal system), Wales, Northern Ireland, and several of the smaller islands off the British coast are