National Payroll Week 2024 – 30 things you didn’t know about payroll, tax and pensions

National Payroll Week is all about celebrating the important job that payroll professionals do to help keep the economic wheels turning. Collecting taxes and NI is a huge task and the PAYE system means employer and employee taxes are managed efficiently. At Adams Accountancy, we provide payroll/PAYE services to our clients to make hiring and managing employees as simple and efficient as possible.

When was the first payroll done?

• The earliest recorded payroll dates to around 7000 BC.
• In the 5th century, ancient Greeks kept payroll records by chiselling information into stone.

When was income tax introduced?

• The first income tax in Britain was introduced in 1799 by William Pitt the Younger to help fund the Napoleonic Wars.
• Income tax was levied on incomes over £60 per year at a rate of 2 old pence in the pound (approximately 0.83%).
• Income tax was originally intended to be a temporary measure but has remained in place ever since, except for a brief period between 1816-1842.

When was National Insurance introduced?

• National Insurance was first introduced in the UK in 1911 by the National Insurance Act 1911.
• The highest ever rate of National Insurance contributions in the UK was 99.25%, implemented during World War II.

How much legislation affects payroll in the UK?

• There are at least 174 pieces of regulation affecting payroll in the UK.

When was the PAYE system created?

• The Pay As You Earn (PAYE) system was introduced in the UK in 1944.

When was the first state pension introduced in the UK?

• The Old Age Pension Act of 1908 paved the way for the introduction of the state pension in 1909.
• The maximum pension was 25p a week.
• The first pension has a ‘character’ clause which stated that individuals had to be ‘of good character’ to receive the payment.
• The first contributory state pension scheme was introduced in 1925.
• It’s estimated that £19.4 billion has been lost across 1.6 million pension pots in the UK.

What strange taxes have been collected in the past?

• Scutage Tax (circa 1100-1154) – Also known as the “cowardice tax”, it allowed knights to avoid military duty by paying a fee.
• Hearth Tax (1662-1689) -A tax of two shillings for each fireplace or stove.
• Window Tax (1696-1851) – This tax was based on the number of windows in a house, leading to many windows being bricked up to avoid the tax. It’s the origin of the phrase ‘daylight robbery’.
• Playing Cards and Dice Tax (1710-1960) – A tax on playing cards and dice that led to widespread forgeries to avoid paying it.
• Wallpaper Tax (1712-1836) – A tax on painted, printed or patterned wallpaper. People avoided it by buying plain paper and decorating it themselves.
• Hat Tax (1784-1811) – A tax on men’s hats, intended to tax the wealthy who were assumed to buy more hats. It led a reduction in hat wearing.
• A Brick Tax (1784-1850) A tax based on the number of bricks used affecting construction workers’ pay.

Other random facts about payroll, tax and pensions

• The UK tax year runs from April 6 to April 5 the following year, dating back to the switch from the Julian to Gregorian calendar in 1752.
• Only about one third of the UK’s 69.1 million population pay income tax.
• The top 1% of earners pay approximately 30% of all income tax collected.
• The UK tax code is one of the longest in the world at over 17,000 pages and around 10 million words.
• The personal allowance (tax-free amount) was introduced in 1979 and was frozen at £12,570 in March 2021 with no plan to increase it until after April 2028.
• The additional rate of tax (45%) was introduced in 2010, initially set at 50%.
• The UK has over 1,000 tax reliefs and allowances.
• The UK has double taxation agreements with over 130 countries to prevent individuals and businesses from being taxed twice on the same income.
• Fiscal drag is the term used to describe a higher tax take resulting from the freezing of tax-free allowances.

Does your accountant support you to run your payroll efficiently?

If you are always having issues with your payroll and your employees, get in touch with the Adams Accountancy team. We’re a team of 10 experienced accountants and bookkeepers who provide exceptional customer service. Check out our recommendations and see what our clients say about us. Call us on 01322 250001 for a free chat about how we can ensure your staff are always happy on pay day.