The income tax in the UK is somewhat which many individuals find terrifying; it is partly due to the complexities of it. Before you start to pay or worry about your UK income tax there are some points you should understand.
PAYE
If you're employed then this will be the system which your employer will use to subtract your tax before you are paid. Depending on your other incomes and the amount you earn you may still have to complete your own tax self assessment form.
Self Assessment
Here is the system which the government released to manage the incomes that are not earned and paid through the PAYE system. This requires the completion of a form annually. It is essential that these are completed correctly and on time. If you do not meet the dates and deadlines you will probably be liable for a fine.
National Insurance
It was actually designed to aid the social security benefits systems, however, it has now become a general tax which you will need to make sure you pay just like income tax.
Tax relief
Tax relief is available on various things, the most apparent is money donated to charity. In case you are donating to charity you will have noticed the Gift Aid option, which means that your donation is increased by the government to refund the tax.
So how do you know how much tax to pay? This is the million dollar question! You will find different 'brackets' of tax. This means that depending on the amount of money you earn you make payment for different percentages of tax. They're reviewed by the government as a part of an annual budget, so if you are hoping to calculate your own tax, be sure to check that the figures you are using are up to date.
Another thing that can affect your tax can be your personal allowance. This is the amount of cash you are allowed to earn before you have to pay any tax at all. As with tax brackets, this amount changes annually with the governments budget report.
Finally there aren't any tax credit. These are equipped for those people found on a low income and are to help to achieve a certain level on monthly income, believed to be necessary. These are two types of tax credits; working tax credits and family tax credits. The process to calculate these is somewhat complicated. However, to apply is simply a matter of completing various forms and submitting them. In case you are unsure whether you are eligible or not then you can contact the relevant department or you can simply fill in the form and if you're not considered eligible you're advised by post. Since this system was introduced lots of families missed out on these because they did not understand the system - don't become one of these statistics. Seek advice from your UK income tax office to obtain the forms.
So all within the self assessment and income tax in the UK is a fairly complicated system and you are always best in quest of expert advice either through an accountant or a government office.
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