You might believe that income tax has been around since the dawn of time, so it’s probably a surprise to learn that taxation on such a massive scale is a fairly recent phenomenon.
According to tax specialists at IBISS & CO., here’s all you need to know about the history of UK taxation in detail.
The United Kingdom of Great Britain
The UK came into existence in 1707, and a window tax implemented earlier under the Act of Making Good the Deficiency of the Clipped Money was continued. The idea of this tax revolved around paying money relative to your prosperity without any of the controversy surrounding the current idea of income tax.
Back then, people opposed the idea of income tax because they didn’t believe that the government had a right to intrude on their private matters.
The First Income Tax
The first British income tax was introduced in 1799, but it remained controversial until the 20th century. This tax was introduced to fund the fight against the French Revolutionary War and the wars that came after in Napoleonic France. The charge was initially 2 old pence to the pound on any income that was above £60.
This was increased to 2 shillings to the pound on any income that was above £200. William Pitt, the person who introduced the idea of income tax, hoped to raise to £10 million every year, but he only received around £6.
Income tax was then abolished at the start of the 19th century before getting re-established because of wars. By the time the 1860s came around, the Victorian British had begrudgingly accepted the idea of income tax.
Modern tax
The basic rate of tax was slowly reduced to 20% in 2007, but a new top rate was introduced for income that was above £150,000 in 2010. This top rate decreased from 50% to 45% in 2013.
In 2022, Chancellor Kwasi Kwarteng intended to abolish this top rate entirely and reduce the basic rate to 19% in April of 2023. However, the reduction plan was cancelled when he didn’t get Parliamentary approval.
Understand Your Taxes
Tax laws are constantly changing, and it can be hard to keep up with all the latest laws and amendments. If you want help, you can consult the best tax advisors in London and IBISS & CO. We’ll help you navigate the difficult world of tax and help you gain a deeper understanding of corporate tax, personal tax, and VAT.
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