Taxation

The UK government needs enough money to run the United Kingdom in the manner that the legal system requires it to. It is the political party in power that decides what it wants to do and it then changes the legal system so that the country is run the way that they want it to be run.

The money that is required to run the UK is mainly collected from the people in the country in the form of taxes. A Tax is a donation to the government that people or businesses have to make to pay for the costs of running the country.
The government has to raise money to spend on public services, which include the health service, the social security system, education. They also need money to pay for many other services including defence and security systems, the police as well as the costs of the civil service and the local councils etc.

There are many types of taxes. People have to pay taxes on their earnings (unless their earnings are low) and businesses have to pay taxes based on their profits. Of course this is a simplistic view and there are other types of taxes that also apply to people and businesses.

Income Tax
People who work full time have to pay taxes on their earnings (unless their earnings are low). In theory the more one earns the more tax one pays but in reality it does not seem to work like that.
Income Tax is paid through the 'Pay as You Earn' (PAYE) system and is taken off earnings by the company people are employed by. The money owed to the taxman is deducted at source, so when you get your pay slip it will record how much tax has already been taken out.

National Insurance(NI)
People who work full time also have to pay another tax which is intended to provide a pension when they retire and to pay for the NHS and other welfare benefits.

People who work for themselves pay their tax through a process known as self assessment. They prepare a set of accounts showing their earnings and costs and pay tax on their profits.

Value Added Tax (VAT)
Another tax, other than tax on earnings, that almost everyone has to pay is Value Added Tax (VAT). The name does not add anything of value to anything! It is simply a tax on buying. Everything that people buy has a VAT rate added to it. There is a zero rate of VAT which is applied to certain basic products, but most items have an extra cost of 17.5% added.