On this day in 1799: Income tax introduced in England

The earliest form of income tax was introduced in Britain to finance the war against Napoleon in 1799. It was an unpopular tax and many people must have found ways to avoid it: instead of collecting an anticipated expected £10 million in the first year, they only got £6 million.

When a peace treaty was signed with France, the tax was repealed, but it was reintroduced when hostilities resumed. This new tax raises considerable sums. During the war the British prime minister also increases revenue by broadening the range of indirect taxes as much as possible.

Income tax was introduced into the United Kingdom by William Pitt the Younger under the Income Tax Act of 1799. The General Commissioners were appointed to implement the Act with sole authority to assess and collect income tax and hear appeals. Under the Finance Act 1946, General Commissioners shed their last remaining administrative responsibility and became purely judicial officers as adjudicators between the taxpayer and Her Majesty's Revenue and Customs (previously known as Inland Revenue). The jurisdiction of General Commissioners is contained in the Taxes Management Act 1970 as amended by subsequent Finance Acts.

It is this second tax act that is the model for most modern tax systems. In addition to imposing tax on different classes of income, such as property, farming, retirement annuities and wages, there was also a withholding tax on interest income paid by the Bank of England.

Read more on tax history.

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