Income tax may seem like a constant in our lives, but it is actually a relatively recent phenomenon. Here is a brief history of UK taxation to help you understand this.
Why do we pay taxes in the UK?
Since ancient times, monarchs, rulers, and governments have used taxes to fund certain services. In the past, taxes were collected to pay for military services, but now, taxes are used to fund schools, healthcare and public transportation, among other things.
Early taxes around the globe
The first elements of the income tax were introduced during the times of the Egyptians, and the Antiquity of Rome. Romans introduced modest assessments of wealth as public taxes. The more wealth someone owned, the higher their tax. In China in 10AD, Emperor Wang Mang imposed a 10% profit tax for all professionals.
Britain’s first Income Tax
William Pitt the Younger introduced income tax in Britain in 1799. Taxes were introduced to help Britain fight the French Revolutionary War, and the subsequent wars of Napoleonic France. Pitt’s tax on incomes above £60 began with a charge of 2 old pence per pound.
Taxes were then raised to a maximum 2 shillings per pound (10%) on incomes above £200. Pitt had hoped that this would bring in up to £10,000,000 in tax per year. Unfortunately, the estimates revealed that he received only around £6,000,000. Income tax was abolished in the early 19th century and then reinstated in wartime. Tax critics ensured that it would only be implemented during wartime.
If you need help filing your tax returns, consider help from Tewkesbury Accountants like www.randall-payne.co.uk/services/accountancy/tewkesbury-accountants/
Sir Robert Peel reintroduced income tax in 1842. Peel initially opposed income tax in 1841, but the growing budget deficit forced him to reconsider. He looked at Pitt’s model. William Gladstone, despite opposition, kept income tax ten years after it was introduced and extended it in order to cover Crimean War costs. In the 1860s income tax was accepted as a part of Victorian society by the British.
Disraeli was elected Prime Minister after Disraeli and Gladstone clashed over taxation and disagreements. Income tax accounted for £6 million out of the £77 million in government revenue. In an era when Britain was thriving, the customs and exports business accounted for £47 million. The abolition was delayed at the turn of the century due to worsening economic conditions and the decline of agriculture.