Research Project on UK Taxation System

Research project
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Table of Contents
Introduction......................................................................................................................................3
Aim and objectives...............................................................................................................4
Research questions.................................................................................................................4
Timeline.................................................................................................................................7
Literature review..............................................................................................................................8
Analysis and Discussion................................................................................................................15
Findings and conclusion................................................................................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19
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Introduction
Tax is a financial charge that is deducted from something that is earned by one at an additional
cost and is added to something an individual is purchasing. It is revenue for the government and
government is collecting taxes so that they are able to serve the society by using it as a financial
resources. The government in UK is using these sources of taxes for funding various public
services, welfare benefits and healthcare services. Taxation system is very important part of
overall economical framework across countries. It is helping in government of a country to earn
revenues. There are different types of taxes that include indirect taxes and direct taxes that are
formulated as per the legal and structural requirements of a specific country. Present report is
based on a research analysis of understand the preset taxation system across UK the main aim of
the report is to determine several areas that require further improvement in the taxation system
across UK (Pedersen, 2020). In the present research there is formation of a literature review for
the purpose of analysing the concept of taxation as a financial charge affecting the different
system across UK.
Research rationale:
In UK the present taxations system is different as it is associated with different types of taxes
that have to be paid by individuals with respect to their specific requirements. The present
taxation system across UK is based on encouraging savings, investments and charitable
donations. It is discouraging motoring, smoking, drinking alcohol and instances of environmental
pollution. Present research report is very helpful in evaluating the way taxation system is
assisting in the process of growth and revenue of government. It is going to help in increasing the
present research and management skills further overall base of present knowledge will also be
enhanced through this report.
Research background:
Taxation is a system that is used by government for the process of rising revenue for the purpose
of funding their overall expenditure. Taxation policies are influencing both economic factors and
the overall behaviour of individuals and business. Economic factors that are affected from
taxation system include the employment level and the inflation rates of a economy. this research
report is going to assist in the process of understand the sets of income tax such as there are
different types of taxation system which includes progressive, regressive, proportional based on
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Ad valoerm principle that is calculate as the percentage of total value of a item. All this varies as
per the specific standards set by the government of a country.
Scope of the study:
The present research report is based on analysing the basic improvement areas that are required
to be corrected in the present UK taxation system. With time there has been a complete change in
the way taxation system is being managed across UK. So there is a requirement to identify and
understand the present structure that is the present taxation system along with the challenges that
can arise while such changes are to be implemented. Apart from this there is further requirement
to form required strategies to deal with such challenges that can negatively affect the present
taxation structure across UK. This report is going to assist in the process of having best practises
that can lead to dealing with overall differences and gaps that are part of present taxation
structure and the specific requirements or changes that are to be done in order to deal with
inefficiencies of this system.
Aim and objectives
Aim
To determine the areas requiring improvement about the taxation system of the UK.
Objectives
 To understand the current taxation system of the UK.
 To identify the areas requiring changes in the system,
 To analyze the challenges that might incur for imposing changes.
 To recommend the ways by which barriers can be mitigated.
Research questions
1. How is the current taxation system working?
2. What are the areas where changes are required?
3. What are the challenges for introducing the new reforms in the taxation system?
4. What are the ways through which challenges can be reduced?
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Literature review
Theme 1: Understand the current taxation system of the UK.
As per (Bournakis and Mallick, 2018), In UK HMRC is collecting taxes from various sources
to ensure that the money is available to fund the public services across UK. The major taxation
systems that are administer by HMRC includes the national insurance, income tax, capital gain
tax, inheritance tax, and value added tax and corporation taxation system (British taxes: a guide
to the UK tax system, 2020).
In UK, Hr revenue and customers is responsible for the purpose of administering and the process
of collecting taxes. The tax receipts for UK are at 633.4 billion pounds in year 2019/20. There
has been an increase of 2.1 percent as compared to previous year. Basic UK taxes include
property taxes, income taxes, capital gains, UK inheritance taxes & the value added taxes. These
are the progressive taxes that is higher incomes have to be paid at higher rates. The British fiscal
system is applied across UK, Scotland and England, Wales, Northern Ireland. The taxation
system across UK involves payments across three different levels of government (Eskelinen,
2018). It includes the central government, local government and devolved governments inform
of council taxes. Local governments are responsible for administering the process of council
taxation in UK.
Local government in UK are responsible for administering the process of council taxes. Value
added taxes are applied across UK to all goods & services. It is also applicable to goods that are
bought from UK beyond exceeding limits. Since year 2021 if there is import or export items
online from outside UK ten it must not exceed 135 pounds while the person is paying VAT at a
particular point of sale, the standard commercial tax rate in UK is ranging at 20 percent although
some of the goods and services may be subjected to low UK commercial tax rates (Taxes in the
United Kingdom, 2020). There are VAT exemptions that are also available on some of the items
such as long term medical supplies. Visitors and tourist across UK can shop for tax free during
the time period of their overalls stay. They are entitled for claiming a refund of VAT paid for the
goods that are bought in the country provide that they are taking the items with them while they
are leaving UK. Mostly the refund charges or shop is charging a fee for the purpose of offering
the services of tax free shopping to people, these refunds are then claimed by last day of third
months after the time period of one month at which it is bought. These are generally available to
visitors, tourists and UK nationals who are living abroad for a minimum time period of 12
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months (Üşenmez, 2018). Not each retailer is claiming a refund they have to find a shop that can
offer them with the facility of VAT checking or refund.
With various taxes for which the residents of UK are liable there is exception of VAT in some of
the situations.
In year 2020-21 all the individuals are permitted for personal allowances of 12,500 pounds that is
making income below at this level are exempted, in UK the overall income rates are depending
on the income of an individual. These steps and bands are also determined by other aspects that
includes capital gains. The overall Taxation rates across UK are same for everyone regardless of
the residency status (Song, Seetaram. and Ye, 2019). The residency status is dictating the income
source that has to be part of return. An individual who is UK resident is taxed on their income
worldwide with allowances to percent the situation of double taxation from some of the
countries. For NON UK resident there is payment of taxation only on income that is earned
across UK.
Corporation taxation system across UK is regulated by the corporation tact act 2010. It is limited
by foreign organisations and limited companies with UK branch and offices have to pay
corporation tax and taxable profits (Beenstock, 2018). It includes trading profits, chargeable
gains and investments from selling assets; a UK limited company has to pay corporation tax on
their taxable profits. It includes investments, trading profits and chargeable gains arising from
selling of assets. In UK a limited company is paying corporation tax on profits from UK &
abroad. Since first April 2015 this taxation rate in UK is 15 percent.
Employment taxes across UK is based on deducting of personal income tax & national insurance
contributions from employment via system that is named as PAYE (pay as you earn).other
dexruiisb of the business may includes some of the pension contributions or loan repayments.
Business has to register themselves as employer on HM revenue or customs to get login via a
PAYE online or get them registered as authorised agent as accountant.
Personal income taxation across UK is register under Income tax act 2007. The overall rate of
income tax is depended on their earned income is above of their personal allowance in the
taxation year. In UK the overall taxation revenue is a mix of individual taxes, social insurance
taxes, taxes on goods and services, property taxes etc. there is a mix of taxation policies that is
posing an influence on the neutral taxation system and distortionary system (Yang. and Metallo,
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