The Different Types of Tax in the UK
There are different types of tax in the UK and it is important to understand what each of them are, who is applicable to pay them, and how they work.
First, why is tax collected? Well the theory is that it is to pay for public services... and therefore the government should be responsible to us and what we want our money spent on (you know you really want to spend billions of pounds on pointless quangos).
Types of taxes that you might pay include the following delights:
- income tax
- capital gains tax
- inheritance tax
- stamp duty
- value added tax
The main tax that people are aware of and pay out on, depending on their salary, is income tax, that lovely little chunk of money that is deducted from each pay cheque you get.
You pay this from your wages, or business profits for the self employed, and some benefits also have income tax taken off (also state pensions and private pensions).
In addition there is national insurance to pay just to add to the fun.
Income tax also comes off your savings, so if you manage to put any money away after paying all your bills and taxes, the government takes a slice of that income too.
When you buy or sell property, there is stamp duty to be paid varying with the value of the house. If you sell assets there might be capital gains tax to pay, and when you die, inheritance tax can take away most of what you earn - the tax that one paper described as "we're so sorry you're dead, now give us your money!"