Which tax is charged on individuals' earnings?

Which tax is charged on individuals' earnings?

• A. Income Tax
• B. Value Added Tax
• C. National Insurance
• D. Corporation Tax

Answer: (A)

The idea being tested is which tax directly relates to the money people earn from work. Income tax is charged on individuals’ earnings, typically deducted through payroll as PAYE, with a personal allowance that reduces the amount taxed and tax bands that apply higher rates to higher incomes. This is the tax tied specifically to personal income. Value Added Tax is a charge on goods and services at the point of sale, not on earnings. National Insurance contributions are payroll deductions that fund benefits and pensions and are separate from income tax. Corporation Tax is charged on company profits, not individual earnings.

The idea being tested is which tax directly relates to the money people earn from work. Income tax is charged on individuals’ earnings, typically deducted through payroll as PAYE, with a personal allowance that reduces the amount taxed and tax bands that apply higher rates to higher incomes. This is the tax tied specifically to personal income.

Value Added Tax is a charge on goods and services at the point of sale, not on earnings. National Insurance contributions are payroll deductions that fund benefits and pensions and are separate from income tax. Corporation Tax is charged on company profits, not individual earnings.