Benjamin Franklin’s famous quote ‘ in this world nothing can be certain but death and taxes’ is often quoted by people to highlight how it is impossible to escape taxes, they will always catch up with you, like death.
But avoidance of taxes is big business, and always makes for an interesting story in the press with celebraties such as Norman Wisdom, Ken Dodd, Jimmy Carr and Gary Barlow, all attracting unwanted column inches around their tax affairs.
Like most things in the history of our planet, Income Tax is a modern invention being introduced in Britain by William Pitt the Younger in his budget of 1798 to pay for the Napoleonic Wars. Income tax started at 2% and increased to a maximum of 10% and it stayed in pleace until 1802 when it was abolished and it raised around £6m for the war effort.
Income tax was reintroduced on a permanent basis by Sir Robert Peel in the Income tax Act of 1842 and has remained ever since.
The government has tweeked the rates over the years to provide stimulation for the economy or to cover deficits in spending wiht the highest recorded rate of income tax being in the Second World War at 99.25% currently (2012) the rate is 50%, 45% from 2013.
Of all the taxes collected by HMRC it is generally the largest revenue collector, amounding for around 1/3 of all taxes collected around £150bn per annum.
If you have UK source income then the answer is generally yes, there are a few exceptions such as the private arrangements the monarchy has with HMRC or if you are a charity, but in general Benjamin Franklin had in right in his quote ‘ in this world nothing can be certain but death and taxes’.
If you have any questions around your income tax, freelancer accounting is a leading provider of accountancy and taxation services to freelancers and contractors in London and the South East of England, and we would be delighted to talk with you.