Report on Taxation Environment of United Kingdom
Added on -2020-06-06
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Taxation
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Tax environment which is there in UK.................................................................................11.2 Roles and responsibilities of Tax practitioner.......................................................................21.3 Obligations of tax payer and effect of non compliance........................................................42.1 Calculation of income, expenses and other allowances........................................................52.2 Computation of taxable sum.................................................................................................62.3 Computation of relevant tax return and its documentation...................................................8TASK 2............................................................................................................................................93.1 Chargeable profits.................................................................................................................93.2 Tax liability to be paid..........................................................................................................93.3 Dealing with tax deductions................................................................................................104.1 Chargeable assets................................................................................................................104.2 Capital gain and loss...........................................................................................................104.3 Tax payable on capital gain.................................................................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
INTRODUCTIONIn any country there are different laws in respect of taxation which are required to becomplied with. There are various levels at which it will be required to be paid and basicallyclassified in three stages which are central, devolved national and local government. It isconsidered that tax is the major source from which revenue is earned by authorities and that willbe used for development of nation as whole (Bird, 2011). There are various aspects which willhave to be understood in this relation so that proper calculations can be made. Tax will becalculated in different manner for individuals and different entities and for that regulations shallbe taken into consideration. In this report the taxation environment will be discussed in contextof United Kingdom.TASK 11.1 Tax environment which is there in UK.Government of any country will be imposing an obligation on all under which they willbe required to pay certain part of their income to them and that amount in known as tax. Thepayer will not be receiving any direct benefit for the contribution made but will be provided withvarious benefits in indirect manner (Adam, Browne and Heady, 2010). This is because the fundswill be utilised for the benefit of whole society. Tax will be categorised in various forms and thatwill be imposed on all. In UK it has been mainly classified in two ways which are direct andindirect taxes which are explained here under:Direct taxes: These are those taxes which will be charged directly from any individual orany other businesses and they will be required to pay the needed amount to authorities. Inthis the burden of tax will have to be borne by directly by tax payer and can be paid intwo manner which will be direct payment or deduction made from income known asTDS. Some of them are as follows:Income tax: The amount that will be paid on total earnings will be covered under this. For thispurpose taxable income will have to be calculated in which various consideration will have to bemade. The main part of revenue is collected from this source only.Corporation tax: The tax which will be paid by all the companies and organisations will beincluded under it. If the business will not be UK based then tax will be payable on that incomewhich will be earned from activities that are carried out in UK.1
Indirect taxes: The payment in which burden will not be directly on the tax payer willbe covered in this. In this buyers will be responsible to pay the taxes which have beendetermined (Mirrlees, 2010). The sales price will be identified and then on that amountthey will be required to be charged. By this buyer is the person who will be bearingburden of taxes which will be paid to government. Some of the taxes which will beincluded in this category are custom duty, value added tax and excise duty. The amount which has bee collected by government are from various categories and inorder to determine the total amount of revenue they all be required to be accumulated. Therevenue which has been earned in 2017 is provided below with the help of a diagram.Illustration 1: Taxable revenue of UK government in 2017(Source: Budget, 2017)1.2 Roles and responsibilities of Tax practitioner.In taxation there are various rules and regulations which have been provided by HMRCand it is legal requirement that tax practitioner will have to comply with all the laws that aremade. By them all the experience and qualifications will be satisfied. The tax payers will get helpfrom them in the process of return filling as they are professional experts having all knowledgein this regard. The work will be carried out by them on behalf of their client and they will be2
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