Taxation of individuals and limited companies in the United Kingdom
Task 1: Duties and responsibilities of the tax practitioner in the UK tax environment 3
Executive summery 3
1.1 UK Tax Environment 3
1.2 The role and responsibilities of the UK Tax Practitioners 6
1.3 The tax obligations of tax payers or their agents and the implications of noncompliance 8
Task 2: Personal Tax Liabilities for Individuals and Partnerships 9
2.1 a) Calculation of the relevant income and allowances for individual 9
2.1(b): Calculation of the relevant income, expenses and allowances of Mr. Thomas (self-employed): 10
2.2 Calculation of the taxable income and tax ...view middle of the document...
This report explains the UK taxation systems and what are the roles and responsibilities of the parties related to the taxation systems. Tax payers must follow the rules and regulation if they violate the law, then government take actions against them.
1.1 UK Tax Environment
Tax is compulsory contribution by the taxpayers to the country imposed by the government under which taxpayers receive no benefit in return. Tax environment is different in different countries. In the follwing section, I will explain UK tax environmen under following three headings;
* Purpose of Taxation
* Types of Taxation
Taxation: To make fund for public expenditures, government or other qualified body impose tax on people, corporations and property. Tax is mandatory levy; every qualified citizen, business organization must pay tax to the government. In return tax payers receive nothing. Tax is the main source of government revenue and government make public expenditure, social contribution from that fund. There are basically two types of taxes; that are direct taxes which tax payer bears directly like income tax and other one is indirect tax which is collected from other sources by the tax payers such as corporation tax.
Purposes of taxation: The main duty of a government is to ensure a civilized society for its citizens. For this purpose, government needs money and tax is the basic sources of government revenues. Again, government ensures greater production and stable price of product and services by effective tax systems (Thompson, 2004). It is an important instrument of fiscal policy that influences the structure and direction of money supply, production, inflation rate, interest rate, price level and total economy of the country. Government uses taxation policies to influence various economic factors like GDP growth rate, inflation, export import, employability etc. For Example government of UK stimulates export by flexible taxation policies and restricts import by increasing tax rate (Angelopoulos, Malley and Philippopoulos, n.d.). Individual’s and business’s economic behavior are also influenced by that tax policies of the government. Finally it can be said that tax systems can greatly influence the overall economy of that country.
Current UK tax system encourages individual saving habits. Government offers different tax incentives on savings accounts like ISAs. Current tax system offers tax relief through gift aid scheme. It encourages charitable donation and ensure better society (Thompson, 2004). Government influences new entrepreneurs and investors also by offering tax relief that motivate the new entrepreneurs and investors. So UK tax system is very fruitful and effective for the society as well as the country.
Types of Taxation: UK central government imposes different types of taxes on public and any other legal entity (Gov.uk, 2015). Basically tax is the main sources of income of any government. Usually folowing categories of...