What is Income Tax?
Income Tax is a tax on individual earnings, which is paid to the government. This tax is then used to pay for hospitals, child care and schools.
However a lot of people don’t know that their entire lives can affect their Income Tax; your job, your savings, your living conditions and lifestyle can all affect how much Income Tax you pay. Only certain things are taxable; like earnings from your employment, income from your pension, income from property, shares or dividends and interest from savings.
Which income is not taxable?
Some income is not taxable, which means that tax is not paid on it. This income should therefore be ignored when estimating how much tax is payable. Examples of income which is not taxable include premium bond prizes, Housing Benefit and Child Benefit.
What are the tax levels?
The Basic Tax Rate – up to £31,785 - will be taxed at 20%
Higher Tax Rate – Between £31,786 and £150,000 - will be taxed at 40%
Highest Tax Rate - Over £150,000 - will be taxed at 45%
How we can help
Income Tax can be a complicated area and it can be hard to know what you do and don't have to declare for Income Tax purposes. You need to include information on many different things in your annual tax return, whether you're employed, self-employed or running a business, or getting your income from something else like property or other kinds of investments. ‘Self-assessment’ means that it is your responsibility to ensure the information submitted to HMRC is accurate.
At Niche we are experts when it comes to helping with tax planning and will make sure that you are saving the most money that you can.