PAY-AS-YOU-EARN

Greymouth Evening Star, 24 September 1943, Page 5

PAY-AS-YOU-EARN

BRITAIN’S TAXATION PLAN

RUGBY, Sept. 22. >( The new British “pay as you earn” taxation scheme applies to all manual wage earners and to all other weekly wage earners whose tax is now deducted. Special arrangements exist for civil servants and railway officials. , A . The new system doos 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 the proportional part of the tax allowances due for the year is set against the total pay to date. This means that deductions will keep pace with the accruing liability each pay day, and “pay as you earn” 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 actual net pay from week to week, because in weeks of higher earnings 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 smalt adjustments will be put right by adjusting the next year’s code number or by repayment. Tax deductions under ihe new system begin in April, 1944. Where it applies there .will be no deduction under the old scheme after liiat date so that double taxation is avoided.

SCHEME WELCOMED (Recd. 11.55 a.m.) LONDON, Sept. 23. Ten million wage-earners in Britain will soon be paying their income tax weekly. Only 3,000,000 taxpayers are not affected by the new pay-as-you-go plan, which operates from April 6, 1944. The plan will apply to .any person whose wage is calculated and paid weekly, whether or not he is a manual worker. Professional men anil others engaged at a yearly salary bul paid weekly will be included. Theoretically, the Treasury stands to lose £250,000,000 because the new plan means “forgiving” part of the income tax which should be paid early in 1944. Any loss, however, will be offset by the gain of immediate payments of tax in the case of new workers and of earlier payments on rising earnings. The Press generally welcomes the scheme, mainly on the grounds of its simplicity and ingenuity. The plan also has the support of the Employers’ Confederation and the Trades Union Congress.