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What are the differences between the US and the UK tax systems?
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The US has a progressive tax system, meaning the tax rate increases as the amount of income earned increases. The UK has a more complex system, where different people pay different rates of tax depending on their income level. 2 Another difference is the allowances that taxpayers in each system have. The US allows taxpayers to deduct certain items such as charitable contributions or medical expenses. The UK system allows for a much wider range of deductions and exemptions, including home mortgage interest and pension contributions. 3 Lastly, the US system is largely based on self-assessment. This means taxpayers must file their own returns and any mistakes can result in interest charges. The UK system is largely based on pre-filled returns, where citizens provide the necessary information to their employers or the state.