Income Tax and Corporation Tax in the United Kingdom Essay

Income levy and Corporation Tax in the unify Kingdom - Essay ExampleThe paper tells that historically, imposeation in Britain was collected from serfs who paid rent to their landlords in return for protection. However, in the 1600s, a unified land equity was passed which vested control and power to the Crown. Land and property taxes were collected from each landowner to support the government. In the 1800s, income tax was introduced, first to support wars and eventually, to support the UK governments deficit. Currently, Her Majestys Revenue & Customs (HMRC) is in charge of collecting taxes in the United Kingdom. There are several types of tax that are payable periodically by certain entities in the UK. They accept Income Tax, Corporation Tax, Duties on goods and services, National Insurance Contribution, Value Added Tax and Fuel Duty. All these taxes put one across different laws and guiding principles. This tax is levied on the profits of businesses. Corporation tax is metric al on the annual income of a business. It was first introduced in the Finance telephone number 1965. Corporation tax in the UK is currently set by the Income & Corporation Tax and its subsequent amendments. According to fragments 6 and 11 of the Income & Corporation Tax Act (ICTA), union tax must be paid by three main groups of entities1.UK resident companies. This include companies that are incorpo appreciated in the UK. 2.Non-resident companies in the UK carrying out trade through a permanent nerve and3.Unincorporated bodies which are not partnerships that fall within the scope of the tax like societies and voluntary associations. Section 8 of the ICTA (1988) indicates that there are two types of profits that are taxed in the corporation tax (McLaughlin, 2011) 1. The widely distributed income of a UK resident company. This includes all the earnings of all the trading operations of such a company well-nigh the globe. 2. For non-resident companies that have permanent establi shments in the UK, corporation tax is levied on the income of the UK permanent establishment. The Act goes further to jell profits to include revenue or income from three main sources (McLaughin, 2011). The first is the revenue accrued from normal operations of the company. The second is capital gains which encompasses revenue from the sale of an asset in an accounting system period. Finally, profits include enthronement income and revenue from dividends and other earnings from other investments. The term accounting period comes with complications. Depending on the circumstances of a business, accounting period can be an event that determines the commencement or issue of trade like the start of business or the termination of business (Section 12). An accounting period is normally required to last for a period of 12 months. In most cases, the financial year begins on 1st April and ends on 31st March of every year. Where the accounting period overlaps this period, it must be appor tioned appropriately and taxes are calculated as required. In 2011, the corporation tax was 26%. Companies that earn amidst ?50,000 and $300,000 will be subjected to a lower tax rate of 20%. There are whatever marginal reliefs that are calculated for companies that earn profits between ?300,000 and ?1,500,000. This marginal relief ensures that such companies pay between 20 and 26%. However, companies earning over ?1.5 million in profits have to pay the full 26% of corporation tax. Income Tax Income tax is on an individuals earnings. It is calculated annually. It applies when a person earns beyond a certain amount, this is known as taxable income (HMRC Income Tax, 2012). There are some reliefs and allowances that are granted to individuals in order to