(1) Direct taxes are the mainstay, indirect taxes are supplementary
The British tax system consists of personal income tax, corporate income tax, capital gains tax, petroleum tax, capital transfer tax, stamp duty , land development tax, as well as value-added tax, customs duties, consumption tax, etc. Income tax occupies a dominant position, accounting for more than 60% of all tax revenue. In 1991, direct tax revenue, including income tax, accounted for 67.3% of the total tax revenue.
Indirect taxes occupy a auxiliary position in the British tax system and account for a low proportion of total tax revenue. In 1991, the British indirect tax revenue accounted for 32.7% of the total tax revenue that year, which was lower than the proportion of direct tax revenue.
(2) Tax revenue and authority are highly concentrated
The UK is a country that implements a centralized system, and tax revenue and authority are highly concentrated in the central government. British taxes are divided into national taxes and local taxes. National taxes are controlled by the central government, accounting for about 90% of national tax revenue, and are the main source of central finance. Local taxes are the responsibility of local governments, accounting for about 10% of national tax revenue. They are an important source of local finance, but not the main source. The main source of local finance is the financial subsidies provided by the central government to local governments.
In line with the division of tax revenue, the British tax authority is also highly concentrated in the central government. The national tax legislation power is controlled by the central government, and local governments only have the right to collect taxes and appropriate tax rate adjustments and exemptions for local taxes that belong to the same level of government. However, these powers are also restricted by the central government. For example, the local tax capping law promulgated in the UK in the 1980s is an obvious example.
2. The British tax system structure
The British tax system consists of direct taxes and indirect taxes.
1. Direct tax. The main ones are income tax, capital gains tax and corporate tax. Individuals, partnerships and trusts are subject to income tax and capital gains tax on capital gains on the disposal of their assets. Companies pay corporation tax on their profits and capital gains. In addition, the UK also levies inheritance tax and gift tax.
2. Indirect taxes. Mainly include value-added tax, customs duties, consumption tax, and stamp duty.
3. Expression of British tax law
The UK does not have an independent tax code. When there are too many regulations covering a certain area, a unified act is compiled. In addition, there are the following major tax laws:
Stamp Duty Act of 1891
Tax Administration Act of 1970
Petroleum Tax Act of 1975
The Value Added Tax Act of 1983
The Inheritance Tax Act of 1984
The Company Income Tax Act of 1988
The Capital Discount Act of 1990
In addition to the above-mentioned laws, court judgments (i.e. case law) also play a supplementary role. However, they are only interpretive rather than legislative, and court judgments are based on previous precedents of higher courts.
For those areas where the tax law is not clear enough or there are doubts, special explanations or explanations formed in practice can be used to provide guidance. Although it has no legal effect, it can generally be adopted unless the legislature makes a decision. leading to abuse of power.
IV. British Tax Management
Responsible for tax management are the Internal Revenue Service and the Customs and Excise Department. The latter is mainly responsible for the collection and administration of value-added tax, customs duties and consumption taxes, while the former is responsible for the remaining taxes. 1. Tax return. Corporate tax is declared and paid at the rate specified for each financial year (from April 1 to March 31 of the following year). For individuals, their income tax and capital gains tax returns are based on the tax year (April 6 to April 5 of the following year).
Tax collection is generally based on tax returns filled out by taxpayers. The company should attach its annual accounting statements to the return if the company fails to provide sufficient information in time for tax officials to assess the tax before the normal tax payment period (within 9 months after the end of the financial settlement period). Then the tax authorities can impose penalty interest.
Individuals should report their income, gains and applied expenses, allowances, discounts, etc. in detail in their tax returns. Independent self-employed individuals must also submit business statements when reporting their taxable business or professional income. Employees can have their employers withhold taxes on their investment income (for this type of taxpayers, the tax authorities generally only require them to file tax returns every few years). Taxpayers are generally required to complete the report within 30 days after receiving it.
2. Collection method. The UK stipulates different rules for companies and individuals respectively, and applies direct collection system or withholding system.
3. Payment method. Companies generally pay their taxes within 9 months of the end of the fiscal year.
For individuals, if the tax withholding system cannot be implemented, the tax authorities will adopt a direct collection system - employees will prepay quarterly based on their estimated income, and adjustments will be made after the actual figures are calculated.
Individuals should pay taxes on their business income, professional income, etc. in two installments on January 1 and July 1 of each year. Non-professional income is paid on January 1 based on the current year's income. Capital gains and other income subject to higher tax rates (such as interest) are paid before December 1 of the following year.