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What is tax and why it matters?

9 March, 2026

Welcome to day 1 of Tax Awareness Week 2026! This week is all about helping people understand why tax matters, busting common myths, and highlighting the value of qualified advisers. 

We’ve created this article to give you a clear introduction to tax: what it is, how it works, and why being tax aware is important for everyone. 

What Is tax? 

Tax is the money that individuals and businesses are legally required to contribute to the government. Without taxes, it would be impossible to fund the essential services that keep the country running. Taxes support public services such as education, healthcare, law enforcement, and national defense. They ensure that schools have qualified teachers, hospitals are staffed with doctors and nurses, police maintain public safety, and the armed forces can protect the country.

How are taxes collected?

In the UK, His Majesty’s Revenue & Customs (HMRC) is responsible for collecting taxes. For employees, income tax is usually deducted automatically through the Pay As You Earn (PAYE) system. This ensures that tax is collected each time an individual is paid, making compliance easier and more efficient.

Taxation is not limited to wages. Value Added Tax (VAT), for example, is applied to most goods and services purchased in the UK. For instance, if you buy a chocolate bar for £1.20, 20p of that price is VAT, which the retailer passes on to HMRC.

There are numerous other taxes, each with its own rules. HMRC ensures that all taxes are charged and collected accurately, maintaining the integrity of the system. In the last fiscal year, HMRC collected £858.9 billion in taxes.

Why understanding tax matters

Taxes fund the services and infrastructure that society relies on. While they can seem complex, understanding how taxes work helps individuals and businesses manage their finances responsibly and appreciate the broader impact on public services.

Get involved in Tax Awareness Week 2026

Throughout Tax Awareness Week, we’ll be sharing content that helps you:

  • Bust common tax myths
  • Explore practical tools and resources to get your taxes right
  • Learn about careers in tax and the opportunities the profession offers
  • Understand the importance of using a qualified tax adviser

You can follow along and get involved on LinkedIn, TikTok, and our website. 

For more information visit Tax Awareness Week 2026 and follow the conversation using #TaxAwarenessWeek.

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.