Tax Law in the UK
One of the techniques to keep the circular flow of income balanced is taxation. It will haunt like a ghost if it is unjust, which use to happen in old times. In United Kingdom Her Majesty’s Revenue and Customs department has the duty to manage taxation. This was formed from the union of Inland Revenue and the Her Majesty’s Customs and Excise. It is very sound body efficient in its work. Also it has a very well qualified team of criminal investigators who deal in cases of very grave fiscal violations.
There are various kinds of taxation, direct and indirect, making part of Tax law in the UK. There also can be different formats on taxation for instance it can progressive or regressive. Income tax is most commonly known. This is direct form of taxation it is payable on the income earned no matter whether an employee or employer. Nation Insurance Contribution known as NICs is also included in the domain of income tax. In case of an employee the employer deducts directly from his wage. The employer himself has to clear his in time.
Income tax is not only restrained to the income one earns from his job or any surplus from his business. It also includes dividends and shares, building and banking interests are also included. Tax also becomes applicable on some transactions for instance when any asset is sold or bought. This is known as Capital Gains tax. Every transaction of buying and selling is recorded in a systematic matter and the job these people do leaves less room for error. Inheritance tax is also payable on the property of the deceased. It is taken before the property is distributed in the heirs.
There are other sorts of taxation that we encounter in our day to day transactions. Every goods and services that we consume we pay tax for it. It is because consumption is very much and resources are scarce. Value added tax also known as VAT in paid by the final consumer of the manufactured product. This is payable on the goods and services. Governments also sometimes increase the rate of taxation on certain products it is to diminish their usage for instance betting, alcohol and tobacco.
People in the Kingdom also pay tax for the benefits they enjoy from the local services for instance police and local services. Taxation also helps the governments to re-allocate its recourses and manages a balance in the circular flow on income.
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