Paye Taxation Uk

History of PAYE

Pay as you earn was implemented to subtract at source (Graham 2010) from installment basis as the

authorities was in dire straits due the effects on war during WWII. This solved problems of irregular

income tax receipts and improved deficits.

Gradually the led to abolishment of Income Tax Act Schedule E and extended to the The Income Tax

(Earnings and Pensions) Act 2003 (ITEPA) working in unison with PAYE Regulations 2003 as the

workforce grew rapidly (Graham 2010) and economy became more complex .

The current PAYE operational structure is still using the same income tax withholding principles from

1944.

The wholesomeness of individual aggregated incomes is done by reconciliation of PAYE and Selfassessments

systems after the current tax year whereby PAYE taking precedence in the tax administration.

1

PAYE ASSIGNMENT – PART 1 [0924515]

2 PAYE – Administration Precedence

PAYE is the biggest (Thuronyi 1998) individual contributor (Adam and Browne 2009) followed by NI

tax receipts by its accumulative concept and at source deduction showing the importance of employment.

Timely collections bring stability to Governments Forecast, Budgets and spending versus other tax

collection system in UK except VAT.

2

Year

Income tax (2, 3)

Capital gains tax (5)

Corporation tax (6)

Fuel duties

Spirit duty

Wine duties

Stamp duties

Customs duties & levies

Insurance premium tax

Climate change levy

Inheritance tax

0

100000

200000

300000

400000

500000

HMRC Annual Receipts 2009-10

PAYE vs Others

Amounts: £ million

PAYE