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What is tax? πŸ’Έ

what is income tax

What is tax? –

Introduction πŸ‘‹

Tax is money that people and businesses have to pay to the government.

Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.

People pay money to the government in order to get services like police stations, fire and rescue services, and schools.

Tax is mandatory so people living in a country have to pay it – otherwise they could get into a lot of trouble.

There are lots of different types of tax in the UK such as:

  • Income tax – paying taxes when you earn money πŸ’Ό
  • Inheritance tax – paying taxes when you inherit money/valuable things from someone who has died πŸ₯€
  • Stamp duty – paying taxes when you buy a home 🏠
  • Capital gains tax – paying taxes when you sell something that has increased in value e.g. a house, shares in a company. πŸ“ˆ
  • Council tax – paying taxes to your local government/council for things like bin collections and schools. πŸ«πŸ—‘οΈ
  • Sales Tax/Value added tax (VAT) – paying tax when you buy certain things – VAT is usually included when you buy things such as food at the shop, and is paid to the government by the shop. πŸ›οΈ

What happens if you don’t pay tax? πŸ€·β€β™€οΈ

People who don’t pay tax can get into a lot of trouble, even resulting in the government taking away their belongings in order to pay the tax money that they owe.

Generally governments would be expected to try to help you pay your taxes, but if you refuse to pay them, then they might have the power to do things like:

  • Making you go to court
  • Giving you fines for not paying
  • Taking money from your bank account
  • Taking your possessions to pay off the money you owe

What is tax evasion?

If you are struggling to pay taxes it’s really important to get help from a qualified professional.

Conclusion πŸ‘

So that’s it!

Hopefully you’re feeling more confident about understanding tax.

If you know any friends or family members who might benefit from learning about tax, share this post with them!

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