Money and tax in the UK
Around the world, to carry out our day to day activities, money is required. It is said that money is needed for a protection. The government too needs money to run affairs. They need money to provide and maintain good roads, potable water, security, electricity and the likes. How does the government generate funds to cater for all is expected of them? Understandably, there are various sources of income to a government, be it through the availability of natural resources or other internal revenue. However, the most widely practiced source of income around the world is by taxation. This has been a very reliable source of income for governments around the world, helping them to generate funds in running their affairs. As a case study, we will now consider money and tax in the United Kingdom.
All individuals in the United Kingdom earning income are obligated to tax. It is just something that cannot be avoided. To avoid paying emergency tax that is much higher than the normal UK tax rates, it is necessary to give your employer your National Insurance Number. Your National Insurance Number is a special number belonging to you. This unique number is allocated to you alone by the Department of Work and Pension in the UK. Having this number affords you the opportunity to access public services in the United Kingdom, work, and pay taxes. Speaking of taxes, tax payment in the UK may involve a minimum of two different levels of government, which are the central government and local government. The central government revenues come majorly from Income tax, corporate tax, National Insurance contributions, fuel duty and Value added tax. On the part of the local governments, their revenues come majorly from grants from central government funds, fees and charges (i.e. on-street parking), Council tax and business rates in England and Wales.
For you to save money on UK income tax and not pay extra amount, the following can be a lot helpful.
- Each individual has a tax code. Before you make payment each year, check your tax code. In case where you have a wrong tax code, you may end up paying an excessive amount.
- There is a set deadline for tax payment. Ensure you pay your tax before the last date. If you miss the deadline, you end up paying a fine which is not too good for you.
- Try to read the tax chart carefully and calculate the numbers properly in order to be sure of the right amount of tax to be paid.
Usually, an extra amount is paid to the National Insurance Contributions. You can claim it and avoid paying an unnecessary amount in tax.
You can also claim money from the Annual Investment Allowance given to businessmen by the UK tax department for investment made on Computer systems or any hardware.
In a situation whereby you have overpaid your tax, you can claim your money back once you leave the UK or when the tax year ends. You have got a grace period of up to six years to claim any overpaid UK tax. Making money in the UK also come with the need to pay tax. Evading tax has stiffer penalties and it is best not to get into trouble. Therefore, paying tax in UK is essential.