Income tax is a tax imposed on individuals or entities (taxpayers). The rate of tax varies with the income or profits of that person. While tax rules vary, there are certain basic principles common to most income tax systems. From April 2020, an individual is entitled to a £12,500 tax-free allowance.
Taxable income:
- Earnings from employment, including benefits in kind such as a company car
- Earnings from self-employment
- Pensions income, including state, occupational and personal pensions
- Some social security benefits
- Interest on savings
- Shares (dividends)
- Rental income
- Income from a trust
| Income Tax Rates UK
2020-21 |
Rate |
|---|---|
| Basic rate
£1-£37,500 |
20% |
| Higher rate
£37,501-£150,000 |
40% |
| Additional rate
Over £150,000 |
45% |
Non Taxable Income
It is important to know what income is non-taxable and can be ignored for tax purposes. There are many forms of income which cannot be taxed. To find out if you receive non-taxable income, contact one of our accounts today for a free no obligation meeting.
Examples of non-taxable income:
- Child tax credit
- Disability living allowance
- Housing benefit
- Income support
- Child trust fund
- Individual savings account
Calculating the correct amount of tax on your salary can be very complex, statistics suggest relying on the tax office can in many cases result in the taxpayer paying too much. Our personal Tax help service is much more than simply completing your self-assessment tax return. As part of our Personal Tax service, we will ensure that:
- your affairs are arranged in the most tax efficient manner allowed within the law to mitigate the tax payable
- your return is accurately completed and submitted by the due date
- you are advised of the correct tax payable
- the tax office correctly enters your liability onto their system and only demands the correct amount of tax
- penalties are not demanded when unjustified
Due to the extensive use of modern technology we are able to provide a cost-effective service in Warrington, and throughout the Cheshire, Merseyside and Manchester area.
Can I Claim Tax Relief
Income tax relief can be set against your taxable income, reducing your income tax liability from self-employed business profits or even from employment income. Deciding which reliefs apply to your personal circumstances can be a challenge as there are many deciding factors. Here at Watkinson Black, our fully compliant accountants are on hand to help.
FOR A FREE NO OBLIGATION MEETING ON COMPLETING YOUR TAX RETURN CONTACT US TODAY!