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Changes Announced in the Tax System of by the Chancellor of the Exchequer in United Kingdom

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The revenue generated stood at 37.3 percent of the Gross Domestic Product of the country. Inciting a break up of the revenue generated it is found that it amounts on an average to 10,900 Pounds paid by the adult population of the country. In addition to the revenue generated through taxation measures, the surplus obtained from the operations of public sector enterprises together with the rent derived from government properties all help to achieve the stated revenue. In regards to the Income Tax system of the country, it is found that income tax fails to be imposed on all patterns of income in the country.

Income Tax in the United Kingdom is levied upon income generated from employment, self-employment, and pension schemes of retired persons, revenue generated through ownership of property and from banks. Moreover, allowances given to the unemployed for job-seeking purposes and income obtained from shares are also taxable under Income Tax. However, the Income Tax is calculated on the revenue earned after rendering certain deductions through allowances. The Income Tax is derived from the income generated in the United Kingdom by deducting such from the source.

The ‘ Tax Deducted at Source’ policy is referred to as ‘ Pay-As-You-Earn’ in the context of the United Kingdom. Further, the Income Tax policy practiced in the United Kingdom is calculated on a cumulative note on the total annual income of a person. Tax payable annually calculated on the basis of income is adjusted against the tax paid to arrive at the remainder. The remaining tax is then divided into months and weeks payable. In regards to the Value Added Tax (VAT) policy of the United Kingdom government, it is found that the rate had been reduced from 17.5 percent to 15 percent in 2009.

In the case of domestic fuel and power, the Value Added Tax is charged around 5 percent. Indirect Taxes in the United Kingdom like Excise Duties are mainly used to conserve natural resources and to curb the propensity of people to alcohol and tobacco products. Further, in addition to Value Added Tax and Excise Duties the government generates revenue also through a pattern of licenses levied on carbon emissions. The United Kingdom also pays due consideration in regards to Capital Gains Tax levied.

It is found that Capital Gains Tax earns due to exclusion from groups whose annual income is around 9,600 pounds. Moreover, proceeds obtained from the sale of homes, private vehicles, and income obtained through pension funds are also excluded from Capital Gains.

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