due_logo
Search
Close this search box.

Table of Contents

HM Revenue and Customs (HMRC)

Definition

HM Revenue and Customs (HMRC) is a department of the UK government responsible for the collection of taxes, the payment of some forms of state support, and the administration of other regulatory regimes. Its role includes the administration of the income tax, National Insurance, and Value Added Tax (VAT) systems in the United Kingdom. Essentially, it is the British equivalent of the U.S. Internal Revenue Service (IRS).

Phonetic

The phonetics of the keyword “HM Revenue and Customs (HMRC)” are:- HM (aitch em)- Revenue (ˈrɛvənʊ)- and (ænd) – Customs (ˈkʌstəmz)- HMRC (aitch em ar siː )

Key Takeaways

Sure, here are the three key takeaways about HM Revenue and Customs (HMRC), framed in HTML format:“`html

  1. HM Revenue and Customs (HMRC) is the UK’s tax, payments, and customs authority. Its primary roles are to collect taxes, ensure the necessary funds are available to support the UK’s public services and to assist families and individuals with targeted financial aid.
  2. HMRC is responsible for a myriad of aspects related to the UK’s financial matters. These include Corporate Tax, VAT, Income Tax, Inheritance Tax, and other forms of taxation. It also handles Child Benefit, Tax Credits, and other types of financial support applications and distribution.
  3. HMRC plays an essential role in preventing and investigating tax evasion and fraud. They have rigorous checks and controls in place and are pivotal in maintaining a fair economy and system where taxpayers contribute correct amounts of taxes.

“`

Importance

HM Revenue and Customs (HMRC) is important because it is the United Kingdom’s tax, payments, and customs authority. Its main responsibility is to collect the money that pays for the UK’s public services and assist families and individuals with targeted financial support. This includes collecting income tax, corporation tax, and VAT, among other types of tax. It also administers statutory benefits such as Child Benefit. It is also responsible for enforcing minimum wage laws and ensuring compliance with numerous other regulatory regimes. Therefore, HMRC plays a crucial role in managing the financial health and regulatory adherence of the nation, making it critical for businesses, individuals, and the economy as a whole.

Explanation

HM Revenue and Customs (HMRC) is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support and the administration of other regulatory regimes including the national minimum wage. It plays a critical role in managing the public finances by ensuring that money is available to fund the UK’s public services and assisting families and individuals with targeted financial support. HMRC collects Income Tax, Corporation Tax, Value Added Tax (VAT), Stamp Duty and Inheritance Tax, among other key elements needed to support the UK’s infrastructure and public welfare system. HMRC is also used for enforcing transport taxes including Fuel Duty and Air Passenger Duty. It is responsible for maintaining a customs service for controlling the import and export of goods and services into the UK. Furthermore, this government body is instrumental in limiting tax evasion, enforcing tax compliance and managing credits and benefits. This includes regulating the payments of Child Benefit, Child Trust Fund and Tax Credits. By doing so, HMRC assists in the economic growth of the country, supports the welfare of its citizens and ensures fair business practices.

Examples

1. Example 1: Tax Return Filing – In the United Kingdom, a self-employed contractor or a freelance worker is required to report yearly income by filing self assessment tax return to the HM Revenue and Customs (HMRC). HMRC uses the data to calculate the taxpayer’s tax liability. Whether someone has multiple jobs or receives other sources of income, all these details need to be reported to HMRC for tax purposes. 2. Example 2: VAT Registration – A retail business in UK, once it has exceeded the VAT threshold (currently £85,000), is required by law to register for VAT with HMRC. Once registered, the business will charge VAT on its goods or services, which it then pays to HMRC. Conversely, the business can also reclaim any VAT that has been paid for business-related goods or services.3. Example 3: Corporation Tax – A tech startup company based in UK, after making profit, would need to calculate and pay its corporation tax to the HMRC. This tax is based on the net profits of the company and is required to be paid nine months and one day after the firm’s ‘accounting period’ , which is typically the financial year.

Frequently Asked Questions(FAQ)

What is HM Revenue and Customs (HMRC)?

HMRC, or Her Majesty’s Revenue and Customs, is a non-ministerial department of the UK Government responsible for the collection of taxes, administering other regulatory regimes including the minimum wage, and the distribution of certain state benefits.

What services does HMRC provide?

HMRC collects the bulk of tax revenue, as well as administering child benefit, paying tax credits, and enforcing the minimum wage, among other services.

Who has to deal with HMRC?

Anyone who pays taxes in the UK, including self-employed individuals, businesses, and corporations, will have to deal with HMRC. This also extends to individuals needing to claim certain benefits such as child benefit.

How can I contact HMRC?

You can contact HMRC via telephone, post, or online. Their contact details can be found on the UK Government’s official website.

How can I check my tax status with HMRC?

Through the HMRC’s online services, you can check your tax code and Personal Allowance, verify the tax you’ve paid, report changes, claim tax relief and refunds, and deal with other tax-related affairs.

Does HMRC deal with VAT?

Yes, HMRC is responsible for the collection of Value Added Tax (VAT) from businesses.

What is a UTR number in HMRC terms?

A UTR (Unique Taxpayer Reference) number is a 10-digit number completely unique to you. It identifies you personally with HMRC for things related to your tax obligations.

How is HMRC involved with national insurance?

HMRC is responsible for managing the National Insurance payments that qualify UK residents for certain benefits and the state pension.

Related Finance Terms

  • VAT (Value Added Tax)
  • PAYE (Pay As You Earn)
  • Self Assessment Tax Return

  • Corporation Tax
  • National Insurance Contributions

Sources for More Information

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More