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Assignment UK Tax System Essay

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Added on  2019-10-16

Assignment UK Tax System Essay

   Added on 2019-10-16

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Essay on UK Tax SystemBrief History on UK Tax SystemBefore we discuss the historical background of the UK taxation we can define taxes as acompulsory levy, enforced by the government, on income or expenditure.Income Tax was the first tax in British history to be levied directly on people's earnings. Itwas introduced in 1798 by the then Prime Minister William Pitt the Younger, as atemporary measure to cover the cost of the Napoleonic Wars. Pitt's income tax was leviedfrom 1799 to 1802, the income tax was reintroduced by Addington in 1803 but it was againabolished in 1816.But it was reintroduced in 1842 by Sir Robert Peel to deal with a massivepublic deficit.Corporation tax, Finance Act 1965replaced this structure for companies and associationswith a single corporate tax, which took its basic structure and rules from the income taxsystem. These changes were consolidated by theIncome and Corporation Taxes Act 1970.Also the schedules under which tax is levied have changed. However, one of the mostsignificant events in the recent history of UK is that the Inland Revenue and H.M Customsand Excise consolidated into a single body. Since April 2005 they are collectively called HerMajesty's Revenue and Customs (HMRC).The tax year commences on 6 April and ends on the following 5 April in the UnitedKingdom. Statement of Income Tax liabilities that is filed with theHM Revenue &Customsdeclaring liability fortaxation. SA 100 is for individuals payingIncome Tax &CT600 for corporation.Element in Statement of Income Tax Liabilities For Individuals (SA 100)Personal Details b) Income earned in Employment c) Income Earned from Self EmployedBusiness d) Income Earned as partner in Partnership Business e) Capital Gain f) IncomeEarned as trustee g) Foreign Income h) Interest and dividends from UK Banks, Buildingsocieties i) UK Pensions, annuities and other state benefits received j) Tax Reliefs k)Charitable giving l) Information about Student loan repayments.***Other Important Points1.Your Personal Allowance goes down by £1 for every £2 that youradjusted net incomeisabove £100,000. This means your allowance is zero if your income is £123,000 or above.2.There is no tax on saving Interest & Dividend Income.
Assignment UK Tax System Essay_1
Income Tax Rates for 2017-18Statement ofIncome Tax liabilities for Corporations Resident Companies are taxable in UK on their worldwide profits, while non- resident UKcompanies are subject to corporate tax only on the trading profits attributable to a UK PEplus UK Income Tax. CT 600 which is statement of income tax liability for corporate.Income Tax Rate for Corporation The normal rate of corporation tax is 19% for the year beginning 1 Apr 2017.Taxable profits for Corporation Tax include the money your company or association makesfrom:Trading profits InvestmentsSelling assetsfor more than they costYou can deduct the costs of running your business from your profits before tax whenyouprepare your company’s accounts. Some expenses aren’t allowed for Corporation Tax,for example entertaining clients - add these back to your profits when youprepare yourCompany Tax Return Capital allowancesClaim capital allowancesif you buy assets that you keep to use in your business, forexample- equipment, machinery business vehicles, for examplecars, vans, lorries.Other reliefsYou may be able tomake a claimfor:a)Research and Development (R&D) Reliefb)The Patent Boxif your company makes a profit from patented inventionsBandTaxable incomeTaxratePersonal AllowanceUp to £11,5000%Basic rate£11,501 to£45,00020%Higher rate£45,001 to£150,00040%Additional rateover £150,00045%
Assignment UK Tax System Essay_2

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