[teamonkey]

When I worked in North America I found this incomprehensible at first. I think the reason is because you need to manually file a tax return each year rather than having it calculated and deducted automatically.

To avoid a massive tax payment at the end of the year, you could elect how much tax would be deducted from your salary each month. The usual way to calculate it was based on last year's income. It wouldn't factor in all tax deductions so, at the end of the tax year, and after you'd filed the tedious and complicated tax return, you'd find that you'd overpaid. Better that than underpaying.

In the UK, usually your employer collects tax monthly. They calculate the amount to collect based on your current monthly salary projected forward and how much tax you've already paid. If there's a mismatch at the end of the year, the tax office uses a 'tax code' to adjust the amount to collect over the next 12 months.