What is tax?
In short
Tax is money that people and businesses must pay to the government, so it can fund public services and benefits.
In plain words
In the UK the main taxes on households are income tax and National Insurance on earnings, council tax on homes, and VAT, which is included in the price of many goods and services. Companies pay corporation tax on profits. There are also taxes on fuel, alcohol, tobacco, and many property purchases. Allowances and bands decide how much of your income is taxed and at which rate. Parliament sets those rates and thresholds, and they change from Budget to Budget.
A simple example
You earn a salary. Your employer takes income tax and National Insurance from your pay before it reaches you. That system is called PAYE. You then buy a coat, and the price already includes VAT, so you pay that tax at the till without a separate bill. The coat maker may also have paid tax on its profits, and business rates on its shop. One purchase can sit on top of several taxes.
Why it matters
Tax pays for the NHS, schools, the state pension, defence, and interest on government debt, among other things. How it is designed changes behaviour. A tax on cigarettes is partly meant to discourage smoking. A relief for pension saving is meant to encourage it. The same total can be raised in ways that fall more on work, on spending, or on wealth. Arguments about tax are arguments about who pays, and about what gets discouraged.
Easy to mix up
Your tax code is not your tax rate. A marginal rate is what you pay on the next pound, not on every pound you earn. The personal allowance means most people pay a lower average rate than their top rate. National Insurance is not a personal savings pot with your name on it. And a shop price that includes VAT is not the shop adding a tip. The seller collects the tax and passes it to HM Revenue & Customs.