Details Of New “Pay-As-You-Earn” Taxation

Northern Advocate, 24 September 1943, Page 5

Details Of New “Pay-As-You-Earn” Taxation

LONDON, September 23

The new “pay-as-you-earn” taxation scheme 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. Eacn wage-earner is given a cede number corresponding with 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 tax deduction. He is also given a book of tables showing for each code the total tax due on total pay up to each pay-day. In compiling the tables, a proportional part of tax allowances due for the year is set against the total pay to'date. This means that deductions will keep pace with 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 pavda> and tnc amount of deduction in earlier weeks Will Level Net Pay Where wages fluctuate, the new system /fill tend to level the 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 bo either smaller tax deduction or 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 next year's code-num-ber or by repayment. 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 is avoided. 10,000,000 Wage Earners Some 10,000,000 wage-earners in Britain will soon be paying their income tax weekly. Only 3,000.000 taxpayers are unaffected by the new “pay as you go” plan which operates from April 6, 1944. says another message. The plan will apply to' any person whose wage is calculated and paid weekly, whether or not he is a manual -worker. Professional men and others engaged at a yearly salary, but paid weekly, will be included. Theoretically the Treasury stands to lose £250.000.000 because the new plan means “forgiving” oart of the income tax Which should be naid 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 has the support of the Employers’ Confederation and Trades Union Congress. '