Taxation policies have forever been used to influence the economic factors in a country such as employment levels, inflation, and import/exports. Taxation policies are also used to direct the economic behaviors of individuals and businesses. For example, these policies encourage individual saving habits and giving charity.
There is a charity-favorable taxation system in the UK called the Gift Aid System. Payments to charity under the Gift Aid System are treated as being paid net of the basic rate of tax (20%); to give a charity £100 the taxpayer needs only make a gift aid payment of £80.
To explain this, let’s discuss Kenny’s taxation process
Kenny earned an employment income of £100. From this income, £20 was deducted as taxation at source by the employer (PAYE) and he pocketed £80. He donated that £80 to a charitable organization. This Charitable organization then approaches the HMRC (Her Majesty’s Revenue and Customs) and then claim the rest of the £20.
In this way, Kenny, in his books of accounts, can extend his Basic Rate taxpayers-band to avail the lower taxation rate i.e., 20% instead of paying at a higher rate band i.e., 40%. HMRC seems to be hitting a sixer on this cricket ground, yeah?
Types of Taxes
Sales Taxes
The taxes that a consumer pays on the purchase of a certain product. Since these are paid by the end consumer, the retailer can avoid paying any tax on a wholesale purchase from a manufacturer. This restricts a tax advantage for the people who make money illegally and are forced to pay the same amount every time they purchase any goods or services.
Property Taxes
The taxes that are charged to homeowners based on the value of their property. These can also include taxes that are collected from vehicle-owners in various locations. Such amounts are usually used to fund local or public services like police, fire, and/or emergency response.
Payroll Taxes
The taxes that are deducted at source by the employer. Here, the employer is responsible for paying this percentage of tax to the government. For example, in the UK, Pay as You Earn (PAYE) is a widely known Payroll tax.
Income Taxes
The taxes charged to anyone that earns an income. This amount mainly includes a dividend income, savings income, and non-savings income. Non-savings income further includes employment income, trading profits of the self-employed, and property income. Savings income is interest income which includes interest from banks, building societies, government securities, and corporate bonds.
Taxation policies have forever been used to influence the economic factors in a country such as employment levels, inflation, and import/exports. Taxation policies are also used to direct the economic behaviors of individuals and businesses. For example, these policies encourage individual saving habits and giving charity.
There is a charity-favorable taxation system in the UK called the Gift Aid System. Payments to charity under the Gift Aid System are treated as being paid net of the basic rate of tax (20%); to give a charity £100 the taxpayer needs only make a gift aid payment of £80.
To explain this, let’s discuss Kenny’s taxation process
Kenny earned an employment income of £100. From this income, £20 was deducted as taxation at source by the employer (PAYE) and he pocketed £80. He donated that £80 to a charitable organization. This Charitable organization then approaches the HMRC (Her Majesty’s Revenue and Customs) and then claim the rest of the £20.
In this way, Kenny, in his books of accounts, can extend his Basic Rate taxpayers-band to avail the lower taxation rate i.e., 20% instead of paying at a higher rate band i.e., 40%. HMRC seems to be hitting a sixer on this cricket ground, yeah?
Types of Taxes
Sales Taxes
The taxes that a consumer pays on the purchase of a certain product. Since these are paid by the end consumer, the retailer can avoid paying any tax on a wholesale purchase from a manufacturer. This restricts a tax advantage for the people who make money illegally and are forced to pay the same amount every time they purchase any goods or services.
Property Taxes
The taxes that are charged to homeowners based on the value of their property. These can also include taxes that are collected from vehicle-owners in various locations. Such amounts are usually used to fund local or public services like police, fire, and/or emergency response.
Payroll Taxes
The taxes that are deducted at source by the employer. Here, the employer is responsible for paying this percentage of tax to the government. For example, in the UK, Pay as You Earn (PAYE) is a widely known Payroll tax.
Income Taxes
The taxes charged to anyone that earns an income. This amount mainly includes a dividend income, savings income, and non-savings income. Non-savings income further includes employment income, trading profits of the self-employed, and property income. Savings income is interest income which includes interest from banks, building societies, government securities, and corporate bonds.