The Influence of Tax Avoidance and Evasion on International Taxation RulesOverview of the Tax System in the UK Every year the Chancellor presents the Budget to fix the cost to provide public services like education, health and social security and the extent of taxes the government has to collect from individual citizens and business entities for raising money to spend primarily on the public services. Key taxes collected by the government are elaborated in the following table: Income Tax on earnings, pensions and benefits (taxable incomes)Income Tax on savings and investmentsTax on certain types of transaction (buying or selling things or giving them away)Tax on buying goods and services• earnings from employment• profits from business• state and private pensions • allowances (jobseeker, carer, incapacity benefit)• profits from partnerships• savings and investments• bank and building society interest • dividends from shares • income from property and rent• capital gains if assets are sold or given away as gifts• stamp duty while buying property or shares • inheritance tax on estates after death• value added tax (VAT) on everyday purchases • fuel duty on petrol, diesel and LPG • excise duty on alcohol and tobacco • general betting duty• National Insurance contributions (NICs) - social security benefitsIt is said that there are only two certainties in life - death and taxes.
Certain taxes apply only to certain people. Groups of individuals having income above a certain limit, qualify for income tax and self-employed individuals can claim back much of the value added tax. The tax system also includes exemptions, reliefs, thresholds and allowances for the benefit of citizens and businesses. How Taxes are calculated and collectedThe tax system shifts the trouble of manage tax affairs to individuals.
Tax payers get a tax-free personal allowance and they have to pay income tax on anything over this allowance. The more is the earning, the higher is the amount of tax they pay. The amount of National Insurance paid by individuals also depends on their earning. For employees whose employer operates PAYE (Pay As You Earn), taxes and NICs are deducted from their salaries or wages. Self-employed individuals are responsible for paying their own taxes and NICs and have to file their Self-Assessment tax returns.
Taxes are deducted at source for Savings Bank and building society interests and dividends and dividends i. e. taxes are deducted before they're paid to the employees. Citizens get a special tax-free allowance for capital gains and they only pay capital gains Tax on anything over this allowance in one go by filing Self-Assessment tax returns. Other taxes, like value added tax i. e. VAT, and various duties on fuel, alcohol, tobacco and betting are charged at flat rates and are included in the price for the goods or services. The "PAYE" System Full-time employees use the 'Pay as You Earn' (PAYE) system to pay taxes and National Insurance Contributions (NICs).
In PAYE system taxes and NICs are deducted at source. The pay slip contains the record of the tax deducted at source (TDS) and NICs deducted at source. NICs are used for funding social security or welfare state schemes such as pensions and national health schemes (NHS). It is the individual's responsibility to notify the taxman that they are earning money and pay appropriate taxes.
They have to fill in the P46 tax form to enable their tax code that explains your allowances for the year. They are liable to be prosecuted by the Revenue and Customs if they deliberately conceal facts of their employment or income. The Role of OCED in International TaxationThe challenge of achieving tax compliance is facing the governments all over the world. There are costs that have to be paid and benefits that can be reaped in what is called as Globalisation or Internationalisation of taxation policy administration.
A move towards a borderless world was initiated opening up new opportunities for taxpayers to decrease their overall tax liabilities. On December 14, 1960, a convention founding the "Organisation for Economic Co-Operation and Development" (OCED) was signed by the UK and 19 other countries, thereby pledging full dedication to achieve the Organisation’s fundamental aims. The OCED provides member country surveys, comparative statistical and economic data and tools to analyse and monitor their economic, social and environmental policies. The OCED Secretariat conducts peer reviews, research and analysis for member countries and offers its expertise as consultancy covering the full economic and social spectrum, which is not possible for any one country alone.