Varying Approaches to Withholding Take Place Around the World

Several different systems represent the various models of income tax withholding used around the world, a global payroll practitioner said May 18.

The UK and Ireland use a “cumulative year-to-date” model, where thresholds separating the income tax brackets in effect are turned into monthly amounts and accumulate each month until the full annual figure is reached, said Tim Kelsey, managing director of Kelsey’s Payroll Services. Employees’ pay is compared against the thresholds for each month to determine the tax rates to apply.

For example, the threshold between the 20% and 40% tax brackets in the UK outside of Scotland is ...