Income Tax Rates in the UK and How Does this Affect You
How much income tax you pay each tax year depends on how much of your income is above your Personal Allowance. Some income is tax-free, and one doesn’t have to pay any tax on the income they get in the tax year. In the UK, currently, the personal allowance is £11,000 and if the income exceeds this figure, they can expect to pay tax on the remainder. One must know how much tax they need to pay on any income gained from employment, property, savings, pensions and capitals gains.
Britain’s income tax has evolved and changed over the years. Taxation in the United Kingdom involves payments to a three different levels, the central government, national governments and local government. The revenues for the Central government come primarily from income tax, corporation tax, value added tax, National Insurance contributions and fuel duty. Local government revenues come essentially from government funds grants, business rates and Council Tax. Today a person in the UK owes tax only on income entitled. The income tax return is the largest source of government revenue for the country.
The tax year is also referred to as the Fiscal Year and the British Personal Tax year runs from 6 April to 5 April in the subsequent year. Finance Act 2004 introduced an income tax regime known as “pre-owned asset tax” with the purpose of reducing the common methods of inheritance tax avoidance. As a UK citizen, one must know how to calculate their tax and pay it in time. Keep in mind that the taxable income is not the same as the total income. Most taxpayers are allowed a certain amount of tax-free income, also known as the personal allowance. They may also get other allowances and tax reliefs, plus, there may be some income that is not taxable.
In order to get to the taxable income, one should add their income from all sources, take away their personal allowance, any non-taxable income, plus the other allowances and reliefs. However, keep in mind that the percentage rates of taxable income may change every year. Those who are on a low income. Their major part or the whole of the income from will be taxable at 0%, which is called the starting rate for savings, especially if earning a lower income, or for those getting income from UK company shares, the income will get taxed at different rates from other income.
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