Most countries around the world have a tax system in place that means people who live and work there have to pay money through different taxes.
In Scotland and the UK, there are lots of different types of tax that we pay. But who gets this money and what is used for?
Who you pay tax to
Taxes are set by the government. That may be your local council, the Scottish Parliament or the UK Parliament. The taxes are collected by a body called Her Majesty's Revenue and Customs (HMRC) and then used by the government.
This video from the Scottish Government explains more about the differences between UK, Scottish and local taxation.
What your tax money is used for
Local and national governments are responsible for a lot of things that the public use every day. To help create, run and maintain these public services, governments need to raise money.
That's where tax comes in. People who live in and use public services in Scotland, pay taxes such as Income Tax, National Insurance, VAT, Inheritance Tax, Land and Buildings Transaction Tax and more.
The money collected from this is used to pay for things in the UK, Scotland and your local authority are such as:
- healthcare costs such as running the NHS,
- social care,
- housing and utilities,
- paying national debt interest,
- waste management,
- public order and safety - for example, the emergency services,
- defence spending,
- costs of running the government,
- state pensions,
- overseas aid,
- and much more.
Check where your taxes go
On the UK Government website, you can view your Annual Tax Summary.
This is a breakdown of how the government calculates and spends your Income Tax and National Insurance contributions. This is a good way to help you see exactly what you pay in tax and where it is going each year.
What happens if you don't pay tax
Paying tax is not something you can opt-out of, it is the law. If you are subject to a tax set by the government, you have to pay it.
If you have a tax debt that you cannot afford or will struggle to pay, HMRC can work with you to help agree on a plan to repay what you owe in an affordable way. However, if HMRC tries to contact you about unpaid taxes and you ignore them or refuse to pay, you may be subject to legal action.
They have enforcement powers such as taking possessions to cover the cost of unpaid taxes, taking money from your bank account, taking money from your wages and more. That's why it is a good idea to try and work out a repayment plan if you find yourself with tax debt.
You can find more information from Gov.UK.
If you need debt support, you can access information, advice and support from Citizens Advice Scotland.
Or, contact the National Debtline:
- Use their online tool to get debt help now
- Webchat with an adviser, Monday to Friday 9am-8pm, Saturday 9:30am-1pm
- Call on 0808 808 4000, Monday to Friday 9am-8pm and Saturday 9:30am-1pm
Get more information about budgeting, saving and money management on our Money & Me page.