BRITISH SYSTEM

Evening Post, Volume CXXXVI, Issue 74, 24 September 1943, Page 7

BRITISH SYSTEM

"PAY-AS-YOU-GO" PLAN

RUGBY, September 22. The new "pay-as-you-earn" taxation scheme in Britain applies to all manual wage-earners and all other weekly wage-earners, whose tax is now deducted. Special arrangements exist for civil servants and railway officials. The new system does not involve elaborate calculations by employers. Each wage-earner is given a code number corresponding to his tax allowance. The employer is supplied with a tax deduction card for each earner, showing the code number and on this he records, week by week, the pay and the tax deduction.

He is also given a book of tables showing for each code the total tax due on the total pay up to each pay day. In compiling the tables, a proportionate part of the tax allowances due for the year is set against the total pay to date. This means that the deductions will keep pace with the accruing liability each pay day, and the "pay-as-you-earn" goal is thereby achieved.

The tax to be deducted or repaid on any pay day is the difference between the figure shown in the tables for that pay day and the amount deducted in earlier weeks.

Where wages fluctuate, the new system will tend to level the actual net pay from week to week in weeks of higher earnings the deductions will be higher and in weeks of lower earnings there will be either a smaller tax deduction or a tax repayment.

At the end of the year, the tax deducted will be found to correspond within very small limits to the tax liability for the year. Any small adjustments will be put right by adjusting the next year's code number or by repayment.

The tax deductions under the new system will begin in April, 1944. Where it applies there will be no deductions under the old scheme after then, so that double taxation will be avoided — 8.0. W.