The history of Great Britain is crucial to understanding why certain things are the way they are. It is the reason why we focus so […]Read more
The history of Great Britain is crucial to understanding why certain things are the way they are. It is the reason why we focus so much on the hearth tax and other forms of policies that have inspirations today. History has always played a major role in shaping countries as we know them.
Britain, as we all know, is divided into counties. Counties have their own administrative and political structures and agenda. They are semi-autonomous and are governed by district councils. They set their own policies on education, public transport, employment and various other sectors that are important to the citizen.
One of the counties of historic significance in Britain is Yorkshire. It remain the country’s largest county to date. Yorkshire has played a big role in the political and historic events that have taken place in Britain. It has comprised at various stages the Celtics, the Romans, the Danish Vikings and the Normans. It has seen the occurrences of legendary wars such as the Battle of Stamford Bridge and the War of Roses.
Yorkshire was historically divided into ridings, including the North Riding, East Riding and West Riding. The term riding comes from the Norse language. The North Riding was a lieutenancy and head of the local militia. It still retains its influences from the multiple cultures that once settles in its shores.
Perhaps the most popular city in the North ridings is Middlesbrough. Middlesbrough is one of Britain’s main industrial towns and its local economy is dominated by chemical industries. Engineering and manufacturing are the other key industries in these parts. During the 1800s and 1900s, when Britain was perhaps the largest industrialist nation in the world, Middlesbrough and the whole of Yorkshire thrived. A chunk of tax revenue came from the industrial activities in these parts.
With things having changed in the modern world and a lot of manufacturing and industrial activities exported to developing and inexpensive nations like China, Philippines and India, the North Ridings of Yorkshire have taken a step back in terms of their key economic drivers. Public revenue comes from other sources, notably council tax.
Recent events saw a rise of an incredible 5% in council tax bills after councilors voted for a budget increase. The increase, as you can imagine, is to offset a widening local deficit, which, according to the government, has been driven by increased social care spending. Middlesbrough remains one example of an economy that has moved predominantly towards service, with implications on various tax rates.
Income tax is the most common means of tax that we are used to. As the name suggests, it is a tax on the income earned. It is the greatest example of socialism in today’s world and is based on the principle that everyone who receives income has an obligation to provide part of it for the cause of the greater good.
In this post, we look at the historic context of income tax in Britain. It was first introduced in 1798 by William Pitt the Younger. The intention of this tax structure at the time was to raise revenue to buy military equipment for the war with Napoleonic France. In a sense, people contributed part of their income to the crown to ensure the safety of themselves and their fellow citizens.
When it was introduced, it was quite nascent and its objective was to raise an annual revenue of GBP 10 million. It resulted only in 6 million in reality. One of the reasons was that at the time of introduction, the tax only applied to wealthy people above a certain threshold. Later, however, the threshold was widened to increase the collectible revenues.
With time, its structure was solidified by adding many of the concepts we can see today in modern Britain. For example, the concept of debiting the tax directly from source was introduced in 1803 by Henry Addington. There, however, remained a controversial aspect of implementing a tax during times of war. This became especially significant after the historic battle of Waterloo, when people were poorer and the tax came as a heavy burden on them.
As a result, the tax was repealed in 1816. But as is always the case if you recall basic macroeconomics, tax appears in significance when there is a widening deficit. This was exactly the case in 1842, when the tax was reintroduced. To avoid earlier controversies, it applied again only to the rich, and remained so for many, many years.
The colonial era began and the sources of tax began to shift increasingly towards the colonies, especially wealthier ones at the time such as Africa, United States and India. British citizens enjoyed a period of prosperity, unburned by the shackles of taxation. We can say with certainty that tax was not a public burden till the beginning of the 20th century.
The 20th century saw the rise of significance of taxation, especially due to the universal appeal of socialism as a way to reduce widening inequality. Of course, there was also the contentious issue of military spending during the two major world wars. The tax rate became 30% by the end of the 1st world war and covered an average on 10 million British citizens.
The tax rate has stayed at these levels and has increased further. IT shows no signs of slowing down. Across Europe, a range of 30%-50% is the new normal today. One can only wonder what the situation would have been had there been no wars.
We read about the history of hearth tax and its historical context in out of our earlier posts (www.hearthtax.org.uk/about/history.html). There we saw the reason why the policy was introduced, and its basic definition and structure. Additionally, we saw the long term trends that it resulted in.
In this post we focus specifically on the tax records and what they tell us today. The National archives contain in detail the various information that can be derived from these tax records, some of which are available in our database at hearth tax institute. The information available is related to the two key information categories of the hearth tax administration – assessment and returns, and exemption certificates.
The amazing aspect of this is that despite the passage of more than three millenniums since that passage of this policy, these details are still available. In fact, you can search in the National Archives E179 database the surname of your great-great-great-great grandfather who lived in that era, along with his county, to obtain his tax records.
With the information of surname and county, we obtain tax records that suggest the type of property and the wealth possessed by each individual. As aforementioned, it enables us also to trace our genealogy back by more than three millenniums. This is a unprecedented level of information available, something of a surprise considering the passage of time since then.
While it is not possible to expect every single record to be available today, records from the years 1662-1666 and 1669-1674 are available for the most of it. There are also records of a similar tax structure, called the window tax, implemented in 1696. As you can imagine, it was a tax on the number of windows.
The tax records show the type of income disparity and inequality that existed at the time. Since the tax was 2 shillings for higher-end property owners and 1 shilling for the rest. This is direct proof of inequality in terms of property ownership, from which an equivalent for overall inequality can be assumed.
In addition, with these records that you can search, it is possible also to learn about the history of houses. Architecture professionals and enthusiasts can derive the layout and type of a house based on the number and type of internal components such as parish, hearths, stoves, windows and so on.
In short, the tax record searches give us a wealth of information from the past. This information can be extremely beneficial when structuring policies as it illustrates details about disparities in individual wealth and property that are still applicable in modern Britain.
Most of us own a property or aim to own a property in the coming years. Since ages, owning a property has been a symbol of status, security and importance. Property is an asset that appreciates slowly but significantly over a period of time, and isn’t as volatile as most other assets. Well, assuming we don’t witness another sub-prime crisis of the extent of 2009!
Before starting the journey of property hunting, there are things to note including administrative processes, rights, taxes, responsibilities etc. We assume that you have read up on basic things such as prices, location significance, neighborhood and average price increases in the area. Let us look at some key items you should be aware of that the average home buyer doesn’t think of.
For a decade now, global interest rates have remained at a historic low. In the UK, it has hovered around the 0.5% mark. However, with reports that the bank of England is set to raise rates above the 0.5% mark, home buyers should exercise caution. Borrowing mortgages, especially considering the average price of a London house, and rising interest rates don’t go well together. Funding part of the investment with a downpayment is recommended.
Negotiation doesn’t end
There are cases where negotiations are finalized, a contract is signed and something new pops up during further home inspections. Remember that your negotiation when buying a property should always be active till ongoing inspections are complete. You don’t want to have unpleasant surprises after you move in!
We know you want to have your own property, and we understand. However, owning a home comes with its own set of hassles. Consider, perhaps, an option of a long term tenancy, which can be available for 99 years or 199 years depending on where you are located at. It offers the same benefits of ownership such as security and stability, with less hassles.
These are just three aspects to consider before signing on the piece of paper. A thorough evaluation will ensure you don’t have regrets later.
Hearth tax, when it was introduced, was a revolutionary policy in terms of scope and implementation. Most of us British citizens aren’t aware of such a historic tax policy that shaped the modern policy process. With tax always a complicated matter, governments and officials always like to keep a track of historic successes and failures.
There were some precedents to the hearth tax policy. Prior to 1662, tax collection was done by the royal crown and wasn’t very uniform from what is known to us today. Uniformity and process scheduling were two aspects that the hearth tax system brought about. But what does it all really mean?
Basically, hearth tax means – a tax on every hearth and stove present in each home in Great Britain. The reason for the emergence of this policy was, as is similar with most cases, a shortfall in government revenue. A shortfall that was so severe that an overhaul of the property tax regime was considered.
The British parliament in 1662 was looking to raise an annual revenue of GBP 1.2 million through tax policies. As a result, it decided to tax every citizen a fixed amount; the very definition of tax today. Citizens whose property’s worth was less than 20 shillings would pay 1 shilling annually for each hearth they possessed, whereas citizens with more than 20 shillings worth of property would pay 2 shillings annually for each hearth they possessed.
Additionally, this was the first time private tax collectors were employed to handle the administrative complexity of the policy. Under the new tax regime, tax could be collected up to twice in a year, something that wasn’t the case before. Documents for tax purposes were structured, fixed and categorized into two categories – assessment and returns, and exemption certificates.
The hearth tax policy led to a radical shift in the assessment, calculation, administration and collection of tax. Modern Britain still imbibes traces of the forgotten policy in its tax policies.