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why do we pay income tax uk

Income Tax is a tax you pay on your income. You donБt have to pay tax on all types of income. profits you make if youБre self-employed - including from services you sell through some most pensions, including state pensions, company and personal pensions and retirement annuities
rental income (unless youБre a live-in landlord and get less than the income from tax-exempt accounts, like the first бе5,000 of some rent you get from a lodger in your house thatБs below the Most people in the UK get a of tax-free income. This is the amount of income you can have before you pay tax. The amount of tax you pay can also be reduced by if you qualify for them. When banks are allowed to create a nation s money supply, we all end up paying higher taxes.

This is because the proceeds from creating new money go to the banks rather than the taxpayer, and because taxpayers end up paying the cost of financial crises caused by the banks. 1. The Proceeds from Creating Money The Bank of England still prints paper money (e. g. бе10 notes). Because it only costs a few pence to print a бе10 note, the government makes a profit on every single bank note that it prints. Between 2000 and 2009, this profit on newly-created money added up to бе18 billion enough to pay the salaries of around 90,000 nurses over that time. But the Bank of England only creates the paper money, and leaves it to banks to create the electronic money that we also use every day.

When banks create money, they not the government or the taxpayer get the benefits of creating that money. From 2002 to 2009, banks increased the amount of money in the UK by бе1 trillion through lending (with every new loan creating new money). Because this money was created by banks, it s the banks that get the benefit from it (in this case, the interestб receivedб on бе1 trillion of additional loans). If the government had created this money instead of the banks, taxpayers would have been able to pay up to бе1 trillion less taxes: approximately бе33,000 for every person who pays income tax over just 7 years. 2. Interest on the National Debt Because the profits from creating money currently go to the banks instead of to the government, the government has to borrow much larger amounts of money to make up for this lost income.

As taxpayers, we have to pay the interest on all this money that the government has borrowed. We currently spend more in interest on the national debt (бе51 billion annually) than we spend б on either defence, the police or on transport (including the road system). б This interest costs works out at бе1,700 per income-tax payer per year. The more money that is spent on interest on government debt, the less money there is to spend on public services, and the higher taxes will be without getting anything extra in return. 3. Deficit: the Cost of Crises and Recessions When the financial crisis hit in 2008, hundreds of thousands of people lost their jobs, people stopped spending and businessesБ sales fell.

All of this meant that the government collected significantly lower amounts of tax, due to fewer people working, and lower profits by businesses. At the same time, more people went onto unemployment benefit, which meant that the governmentБs costs went up significantly. The gap between the money coming in (tax revenue) and the money going out (expenditure) rocketed from бе30bn right up to бе180bn. This gap is the БdeficitБ, and had to be covered by borrowing money. Without a banking system that creates money every time it makes a loan, we wouldn t have these crises and wouldn t need to use taxpayers money to rescue banks.

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why do we pay income tax uk
why do we pay income tax uk