TIL Will Smith was about to declare bankruptcy until he was picked to star in The Fresh Prince of Bel-Air and had to pay the IRS 70% of his salary over the first three seasons

That sounds so complicated.

We have payroll taxes for people who are regularly employed i.e. wage earners. The employer pays this tax by automatically deducting the part the employee owes from their paycheck.

Is everybody doing their taxes at the end of the fiscal year just a Hollywood meme then? In the UK if you are on PAYE (Pay As You Earn: payroll tax, national insurance, and state pension deducted by the employer) and are above your Personal Allowance (first £12,500 of your annual income is tax free) then the only time we'll ever need to submit something to HMRC (our IRS) is tell them which account we want them to pay in to when they tell us we're entitled to a tax return.

Every service, electrician, mechanic, stripper, etc. You would have to withhold the taxes and file each one separately at tax time.

Fortunately here tradies are VAT (all sales taxes) exempt for goods, parts, and services (it works like a discount card from specific accredited vendors). We don't pay tax on private contractual services under £3,150 per fiscal year. A lot of tradies are PAYE and Self Assessment (self employed income statement) so HMRC already knows what their tax code is from PAYE, then the tradie submits his total income (including PAYE) and HMRC deducts the difference. It's startlingly competent, so there's no bullshit for the tradie, his contractor, or the client.

If you try to fob HMRC off or just make a mistake they keep you on record for 5 years and if you go onto PAYE then they start deducting what you owe in small amounts paycheque by paycheque until your debt is paid off without you ever realising what has happened because it's like an extra £5-£10 per calendar month. If you seriously cock up then your friendly neighbourhood HMRC auditor'll pop round to give you a hand. At the start of covid in the UK a lot of tax evading employers fucked themselves because business reliefs and furlough (HMRC paying staff compensations instead of the employer to keep people in employment through and after the pandemic) were calculated based on employer reported incomes: thousands of idiots phoned up HMRC demanding to know why they only got a few hundred sterling to pay staff compensations and accidentally confessed to tax evasion and fraud and many of them were probably pocketing staff PAYE and NI contributions.

TL;DR: it just works

/r/todayilearned Thread Parent Link - eightieskids.com