Sage & Time Ltd is a small financial consulting company with about 100 employees scattered across the UK, all working from home. Table 1 shows information on pay and tax for selected employees of the company living in Scotland and in England.

Table 1 Examples of pay at Sage & Time Ltd (2021/22 tax year)

Employee	Residence	Gross pay (£)	Pay after income tax and National Insurance (£)	Average total tax rate (%)
Sally	England	63,500
Karim	Scotland	63,500	43,836.49	30.97
Maria	England	31,600	25,150.16	20.41
Thor	Scotland	31,600
Jamie	England	20,300	17,466.16	13.96
Liz	Scotland	20,300	17,487.13	13.86

1.1 Describe what is meant by a progressive income tax system and discuss one way that an income tax system may be structured so that it is progressive.

1.2a Complete Table 1 by using the Income tax and National Insurance Calculator to find Sally’s and Thor’s pay after income tax and National Insurance have been deducted and, for each of them, their average total tax rate (not the average income tax rate).

1.2b Based on Table 1 (now that you have completed it), explain which income tax system, that of Scotland or England, is more progressive.

1.3 Liz’s line manager has agreed that Liz’s net pay will increase to £18,560 three years later (in 2024/25). Over these three years, inflation is predicted to average 2% per year. Using the Inflation calculator, select and report the relevant result from your calculation to help you explain whether in 2024/25 Liz is likely to enjoy a standard of living that is higher, lower or the same as today.