Improving the Taxation System: A Case Study of the UK

"To analyze the changes required in improving
the taxation system: A case study of the UK."

Introduction
Tax is a financial charge deducted from something earned by one at an additional
cost and is added to something an individual is purchasing. It is revenue for the
government and government to collect taxes to serve society by using them as
financial resources. The government in the UK is using these sources of taxes for
funding various public services, welfare benefits, and healthcare services. The
taxation system is an essential part of the overall economic framework across
countries. It is helping the government of a country to earn revenues. There are
different types of taxes that include indirect taxes and direct taxes formulated as per
the legal and structural requirements of a specific country. The present report is
based on a research analysis of understanding the current taxation system across
the UK. The report's main aim is to determine several areas that require further
improvement in the taxation system across the UK (Pedersen, 2020). There is a
literature review to analyze taxation as a financial charge affecting the different
systems across the UK in the present research.
Research rationale:
In the UK,the present taxation system is associated with different types of taxes that
have to be paid by individuals concerning their specific requirements. The current
taxation system across the UK is based on encouraging savings, investments, and
charitable donations. It is discouraging motoring, smoking, drinking alcohol, and
instances of environmental pollution. The present research report is beneficial in
evaluating howthe taxation system assists in the government's growth and revenue.
It will help increase the current research and management skills further overall base
of present knowledge will also be enhanced through this report.
Research background:
Taxation is a system used by the government to raise revenue to fund their overall
expenditure. Taxation policies are influencing both economic factors and the general
behavior of individuals and businesses. Economic factors affected bythe taxation
system include the employment level and the inflation rates of an economy. This

research report will assist in understanding the sets of income tax, such as different
types of the taxation system, which includes progressive, regressive, proportional
based on the Ad Valorem principle that is calculated as the percentage of the total
value of an 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 analyzing the primary improvement areas
required to be corrected in the current UK taxation system. There has been a
complete change in how the taxation system is being managed across the UK with
time. So there is a requirement to identify and understand the present structure that
is the current taxation system and 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 the UK. This report will assist in having best practices that can lead
to dealing with overall differences and gaps that are part of the present taxation
structure and the specific requirements or changes that are to be done to deal
withinefficiencies 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?

Literature review
Theme 1: Understand the current taxation system of the UK.
As per (Bournakis and Mallick, 2018),in the UK, HMRC collects taxes from
various sources to ensure that the money is available to fund public services across
the UK. The major taxation systems administered by HMRC include 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 the UK, customers are responsible for administering and the process of collecting
taxes. The tax receipts for the UK are at 633.4 billion pounds in the year 2019/20.
There has been an increase of 2.1 percent as compared to the previous year. Basic
UK taxes include property taxes, income taxes, capital gains, UK inheritance taxes &
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 the UK, Scotland,
and England, Wales, Northern Ireland. The taxation system across the 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 the UK.
Local governments in the UK are responsible for administering the process of council
taxes. Value-added taxes are applied across the UK to all goods & services. It is also
applicable to goods that are bought from the UK beyond exceeding limits. Since the
year 2021, if there are 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 the 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). VAT exemptions are also available on some of the
items, such as long-term medical supplies. Visitors and tourists across the UK can
shop tax-free during the period of their overalls stay. They are entitled to claim a
refund of VAT paid for the goods bought in the country, provide that they are taking
the items with them while they are leaving the UK. The refund charges or shop
charges a fee to offer tax-free shopping services to people; these refunds are then
claimed by the last day of the third month after one month at which it is bought.
These are generally available to visitors, tourists, and UK nationals living abroad for
a minimum time of 12 months (Üşenmez, 2018). Not each retailer is claiming a