Income Tax! | British VS American

How exactly does the income tax system work in the UK vs in the US? Luke and I find out!

Thank you so much for watching! Hope you enjoyed it! This is the first video I've shot with my new prime lens. What do you think? I've never had a video on my channel with such a beautiful bokeh before! For future collabs, I'll definitely be decreasing the aperture though. The camera seemed to prefer Luke's face, even with mine saved in the system!

If you're new to my channel and videos, hi! I'm Evan Edinger, and I make weekly "comedy" videos every Sunday evening. As an American living in London I love noticing the funny differences between the cultures and one of my most popular video series is my British VS American one. I'm also known for making terrible puns so sorry in advance. Hope to see you around, and I'll see you next Sunday! :)

Snapchat: EvanEdinger

How I make my videos! {affiliate links that support my channel! :D )
Editing software - Final Cut Pro X

#BritishVsAmerican

[brtn]

Fact check. There IS a level of income below which you do NOT pay tax in the US. Otherwise very interesting presentation of the differences. I'm a Briton living in the U.S. and I think it would have helped to explain "withholding tax" which is very similar to P.A.Y.E. except that if you are in employment, all your income is taxed so you get a refund of overpaid tax (for personal allowance etc that you paid tax on) when you submit your return each year.

[daniellej]

Thanks for educating us on what we didn’t learn in school

[Chayatfreak]

UK Accountant here, in the UK a PAYE employee can choose to file a return and claim all those tasty deductions if they want to.

[Zmbrer]

Learnt more about the uk tax system in 15 minutes than I have in my entire 17 years

[anca]

When I've heard that in US the price of the item in the store is not the actual price of the item at the register blew my mind! How an earth do you people shop? Is absolutely ridiculous

[johnpotts]

Love you saying "I've always done my taxes fairly". Because if there's one thing you don't want to do when fiddling your taxes, it's admitting it over the internet!

[koue]

While you are taxed at the 10%, it’s all refunded if you earn less than $12, 200 (2019 tax year) due to the standard deduction when it comes to filing. Tax liability and tax brackets are not the same.

[NoFormalTraining]

I never really expected anyone to do a video on this subject, but you both did very well explaining the tax systems we have in the UK. There are a couple of things I just want to clarify though.

You can actually claim job related expenses (i.e a business trip, meal expenses on said trip, hotel costs on said trip) via PAYE assuming your employer hasn't reimbursed you for them in full, or under the limits that HMRC will make allowances for. But in these cases it's more a reduction in the overall tax rather then a refund of the expenses themselves. This can also carry over into your tax code (which is made up of your tax free allowance) for the following year if it's a recurring thing, this would actually give you a higher code (i.e. more tax free allowance) so you get charged less tax as a result on your payslip.
Likewise if you have a benefit in kind (i.e. a company car) this can put into your code to reduce the tax free allowance to charge the tax due on the company car via your payslip.
Now the good news is you should be able to either call the tax office or use their webchat to make these declarations, to have the current year and the last four years reviewed. If you go over a certain limit however you may need to file a self assessment tax return, which is what Luke needs to file as a self employed person, but unlike Luke you would be completing the employment section, along with the expenses.

One other thing I have to point out, as far as income tax is concerned, whether you are self employed or PAYE or working in any other version of income tax (such as the Construction Industry Scheme), you are responsible for making sure you are paying the correct amount of tax. In PAYE, all your employers knows is what your tax code is and what tax should be charged by it on your income. They have no knowledge of what goes into your tax code, and they have no right to know either. But if your code is wrong the tax liabilities are still yours.

So please make sure you check any tax code notices you have from HMRC and that code is being used on payslips you get after any code changes.

Also just be aware, if you get an email claiming to be from HMRC telling you your due an income tax refund, AND it tells you how much it is and gives you a link to click, this is a scam email, a phishing scheme to get your bank details. HMRC does send emails about refunds but they won't tell you the amount or give you any links to click.

That was a lot more information then I thought I'd be adding to this :D

[emmahigham]

'luke is the only one knowlagable about tax'



That says something about our education system

[papaquonis]

I'm just happy I live in a country where I only have to spend around 2 minutes per year even thinking about my taxes. Everything is just handled automatically.

[captainkrunch]

Interesting video! In the US, if your total income is LESS than the standard deduction (roughly $12, 000), then you are not required to file a tax return or pay any income taxes. Just an example if you make $20k a year, your Taxable income would be ~$8k. And you'd have to pay 10% on that $8, 000, not the whole $20k.

[HopeWilson]

It’s ironic when you’ve just finished learning about income tax to then watch a video on income tax

[thatsaltybrit]

I don’t get why Americans who don’t live in the US still have to pay US taxes

[KatyAdelson]

Sometimes I think the US government made the taxes so confusing and convoluted just to take money from poor people who can't afford help with their taxes.... =( The w4 form usually sets stuff up to have our employer send more money to the government than we actually owe, and it's up to us to declare our wages to get that money back. If you don't know what you're doing (and it's already super confusing + not taught in public school...), then you probably won't get the tax return back that you deserve... It's kind of messed up. :/

[empty]

That shirt looks really good on Evan, green really suits you

[celestialdolphin]

I learnt more about how my taxes work in this video than I ever did in school

[maybachlover]

7:40 With the standard deduction, this is not true. The US tax brackets are based off “taxable income” which is earned income minus deductions. The standard deduction (which is given to everyone at any income level) is $12.2k for individuals, so in essence, the first $12.2k of earned income is not taxed.

[joanna.mytravels]

I have been working under PAYE most of my adult life. I was also self-employed for about 3 years. I think Income Tax in the UK is handled relatively well. The self-assessment form used to calculate for self-employed business is not that difficult to complete and there are usually notes to help. As long as an individual keeps records from the start it is easy to fill in. It used to take me under half an hour to do. Records keeping is important.
Side note, there are actually things you can deduct under PAYE but they only apply under specific Legislation for very specific work groups - which means you usually need an accountant to do it for you. I only know it because I once worked as admin for a company that prepared refunds at the end of Tax Year. And to be honest, most of my Tax knowledge comes from the induction and training I had for that job.
American taxes sound terrifying and filled with anxiety.

[glennsmith]

The reason the UK has higher taxes is because health care is included in the taxes when in the US it's paid for by the consumer separately.

[Cookoo]

“What a tinny little thing in a sea of crap” lol well said ☺️