A Brief Explanation Of The Terms Used In Tax Law
Tax collection is not a new idea. Citizens of a state have been paying tax since the period of slavery of Israeli children in Egyptian era. Every citizen and organisation of a country that is earning money has to pay tax.
The tax, which is taken from the citizens, is then utilised by the government in carrying out various jobs and services for the betterment of the state. Tax is applicable on every earning citizen and organisation of the state. The government then uses tax that is taken from the citizens in order to achieve some goals and targets. Tax can be divided into two categories called progressive and regressive taxes. Progressive tax is taken according to an individual’s amount of earned money. Alternatively, we can say the more you earn, the more would be the amount of progressive tax that is applicable on you.
On the other hand, amount of Regressive tax that you pay remains same. A very good example of regressive tax is that of Sales Tax. Every buyer has to pay a certain amount of Sales Tax for everything he purchases regardless of his income. It is a general thought that Regressive tax implementation affects poor citizen more than wealthy individuals of a society.
The fringe benefits offered by the employer to its employees are also taxable. Fringe benefits are the non-cash benefits that are usually offered by the employer to its employees in order to keep them satisfied and improve the quality of their lives. If someone earns less than a certain amount of money in a year, then there are different tax rules applicable on him/her.
Capital Gains Tax or CGT is applied on those possessions whose worth has risen like shares or property. Their worth fluctuates over the period of possession. If there is a rise in worth and value of possessions, the Capital Gains Tax is applicable on the person who owns the asset (shares and property, etc).
An individual pays this Capital Gains Tax when he/she is planning to sell the asset or give it away to someone else. In addition to that, there is a Gift Aid, which is a regular or a one-off amount from taxed income, granted to charities. The charity can claim the tax back.
HM Revenue and Customs (also called HMRC) are the government departments responsible to handle evaluation as well as collection of many types of taxes that also includes VAT or Value Added Tax. Not only has that but, HMRC also pay child benefits and tax credits.
Then of course, there is income tax, which is self-explanatory. This tax is levied on income from employment, property, savings and investments, pension, social security and self-employment income. Overall, the list of tax terms is very diverse in nature, nevertheless, this was a summary of the core and basic concepts that are used in tax law.
Simon P Jennings is a personal insurance consultant. Take services and help of professionals about Beneficiary Trust today at http://www.claimsadvicecentre.com
