Taxation Assignment Example | Topics and Well Written Essays - 2000 words

Taxation - Assignment ExampleThese 2 systems worked severally in the past and the tax authorities maintained separate tax systems for income tax and national insurance policy contributions. Income tax was taxed annually in a progressive manner on individuals and corporate bodies whereby low income earners were taxed freeze off than high income earners (UK Government, 2012). The tax rates increased with increase in incomes of individuals. On the other hand, realises atomic number 18 payments to individuals by the state. They are compensable to individuals through the bank, reference book union account or building societies. If one does non have any of these accounts, he/she whitethorn be paid through Post Office flyer account. There are various types of benefits in UK. Attendance allowance is a tax-free benefit paid to individuals of over 65 years who are mentally or physically handicapped. Two rates of up to ?71.40 are payable per week. Carers allowance is payable weekly in advance or both 4 or 13 weeks. Child benefit is a universal claim by parents for their nipperren (BBC News, 2012). They are paid after every four weeks in normal situations and weekly for single parents. Tax credit is also paid weekly or after every four weeks, to families with children, whether the parents work or not. stultification living allowance is is a tax-free benefit payable after every 4 weeks to incapacitate people who have walking difficulties and who need someone to help them walk. Other types of benefits include crisis loans, council tax benefits, fellowship grant care, child trust fund, etc. 2. Description of the proposed recommendation The proposed recommendation requires the integration of income tax with benefit systems. To achieve this, the UK tax system first needs to merge income tax and National insurance. These are two different ways in which income tax are paid in UK. Maintaining the two types of tax systems may be costly, less candid and burdensome. Integrating the two systems will therefore bring forth an easier system of paying income tax in UK. The integration of income tax with National insurance contribution makes it more(prenominal) transparent for the tax system. The progressive taxation in UK includes 20% basic rate, 40% higher rate and 50% additional rate of income tax (Mirrlees et al, 2012). If this income tax is integrated with National Insurance Contribution, the new rates may be 31%, 41% and 51% respectively. This is a more transparent mechanism which enables individuals to pay for their taxes more easily at once rather than maintaining two separate tax accounts. The second step in the integration of benefit and tax systems is the integration of the benefit system. In this case, the benefit and tax credit systems are merged together. This is a messy and complicated mix of overlapping programmes. The programmes which need to be include programmes mandatory to provide support for low-income families and benefits pr ovided to give non-means-tested support for various contingencies. The former class of programmes includes job-seekers allowance, income support, housing benefit, pension credit, child tax credit and council tax benefit. On the other hand, benefits for non-means-tested support for contingencies include state pension, disability allowance, carers allowance, winter fuel payment etc (Mirrlees et al, 2012). Because several families claim these benefits simultaneously, it is necessary to integrate the two systems into one compliant system. The recommended system