2006RUS

For those of you not in the know – tax credits are the UK government’s mechanism for the helping the less well off. They are designed to help people with children and those who work with low incomes.

So why is this a problem for accountants in Leeds? The socio-economic nature of the city means there are great disparities of income. There is a healthy financial sector with much of the benefit flowing to the affluent parts of town; conversely parts of the city suffer from extreme deprivation as manufacturing declined over the past few decades. Some of the larger accountancy firms in Leeds have focussed on clients that are better off, assuming that those with lower incomes cannot provide the kind of work that brings in the most fees. As tax credits are loosely based on income tax legislation, this leaves large sections of population in need of an accountant, but without the means to pay for one.

Due to the complexity of the system, an average tax credit claimant will not be able to understand how the system works. It is based on income tax legislation with additional rules regarding household income. There has been a number of stories in the local press of families having to repay large sums of money to HMRC. These stories have acted as a scaremonger to other families, many of which do not submit a claims at all, potentially losing out on thousands of pounds a year. Due to the complexity of the system, an average tax credit claimant will not be able to understand how the system works. It is based on income tax legislation with additional rules regarding household income. There has been a number of stories in the local press of families having to repay large sums of money to HMRC. These stories have acted as a scaremonger to other families, many of which do not submit a claims at all, potentially losing out on thousands of pounds a year.

Accountants in Leeds need to understand there is a ripe market out there. If the profession is to improve its image and be seen to help those in need rather than those already well off, then advice on tax credits for modest fees is a real opportunity. There is also a commercial aspect as smaller practices seeking to expand may find more clients by focussing on this market. RJD Associates Accountants in Leeds is one such firm that seeks to help those in need.

Tax credits are a legacy of the Labour government. The Conservative party have vigorously opposed the system before and after the election in May to sue its complexity and the way it penalises those who increase their income. The recent budget has shown some moves to start weaning people off benefit dependency by making some discreet changes to the calculations. Expect to see some major changes in this are in the next few years, which I’m sure will present more of a challenge of accountants in Leeds.

If you would like to learn more about how tax credits might be effected please visit our tax credits info page.

In order to explore the historical facts about an old taxation system on windows in the United Kingdom, read on. The window tax was a tax which was introduced into the United Kingdom in the late 17th century by King William the third. He was finding it hard to find a way to tax people based on their income or wealth because many people refused to tell the king how much they earned. They felt it was a completely private matter and certainly no business of the King.

To find a way to tax them based on some sort of wealth measure, the King decided to tax his subjects depending on the size of house they inhabited. Each householder was to pay a flat rate of 2 shillings. Then in addition to this, each person with more than 10 windows in their dwelling would pay extra tax.

For a property which had between 10 and 20 windows the householder would pay an extra four shillings on top of the base line 2 shillings. For a property with over twenty windows, the window tax was 8 shillings extra. In later years, the minimum number of windows which would be taxed was reduced to 7. In 1825, a house with a minimum of 8 windows was to have an extra tax imposed.

Poor subjects who were eligible for the church’s charity could claim an exemption. This was irrespective of the number of windows their dwelling contained.

However, in the 17th and 18th centuries, many larger houses could be seen with bricked up windows. This is an obvious attempt to avoid this window tax. In Scotland, after William Pitt the Younger introduced this tax in the 1780s, the windows were painted black with white frames. This was also done in order to avoid paying the tax. These popularly became known as Pitt’s pictures. Examples of these windows can still be seen in Charlotte Square in Edinburgh.

Many of the more wealthy families of the time were thought to show off their wealth by having houses of many windows built. They may even have had extra windows put in were walls existed to prove that they could afford to pay the tax.

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