Tax Facts

Tax is one of the most important, but least popular aspects of money.

Tax is basically an amount of money that is paid directly to the government on any sum that you earn, or have in savings.

There are many different types of tax, but the key one we will cover here is called 'income tax'.

This is simply a tax on your income, and income can be described as money you earn (wages) or income from investments (interest).

An example of this would be if you earn £100 a week, then £20 of that goes to the government as tax, leaving you with £80.  The £80 is known as net pay or the money left after tax.

The government collects tax from everybody who works, or has investments.  They then use this money to pay for many different things such as schools, hospitals and roads that we all use.

Some people think that this is the fairest way of paying for things, as everybody contributes towards the things we all use.  Some however think it is unfair, because the more you earn, the more tax you pay.  In fact, if you earn over £150,000 per year, half of all your earnings goes to the government as tax!

The fact is though, there is no getting away from tax, and it is something that you will all pay as soon as you are earning money.