The UK as 100 taxpayers [Infographic]

In a bid to increase executive outside investment into the UK, the government reduced the tax rate from about 50% to 45% but is this enough to attract investors into the country? Lowering the tax is expected to increase the number of big international investments into the country giving the government more sources of income tax revenue. Collating all these factors, it is expected to lead to an increase in the total amount of tax collected. International tax rates are becoming more competitive with time and the UK still has the 18th highest taxation rate in the world despite the recent tax deduction. Some pundits argue that this plan can easily backfire and projected tax revenues may be lower than the initial forecast.

The UK as 100 taxpayers [Infographic] / Via londonaccountants.goodmanjones.com

There is a long way to go as many still view the UK tax system as burdensome and complex. As much as lower taxes encourage growth, job creation and spread prosperity, the 2020 Tax Commission’s proposal had a bigger picture in mind and not just the short term effect of lowering the tax rates. Some of the suggestions that the commission proposed is that there should be a more generous tax allowance for all tax payers and that the tax rate should be uniform. All tax payers should incur a single, fair and proportional tax rate on all their income sources.

New tax laws also stripped child benefits meaning that many middle income families were paying a higher amount of tax. Large marginal tax rates on struggling families are bound to degrade their motivation to work and this is never a good sign. We have provided a neat infographic that shows some statistics on the UK’s sources of income tax and some simple data and information to go along with it. Hopefully it will help you understand the complex tax system in the UK.

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