To find out more, you can either watch our video or read about it below.
This is the tax charged on the income of Individuals, Sole Traders and Partnerships. Income tax is assessed for each self-assessment tax year which begins on 6 April in the year and ends on 5 April in the following year.
Most people pay income tax through PAYE which is deducted from their wages before they receive their pay. If you have other sources of taxable income you must complete a Self-Assessment Tax Return. This can be done using a paper form or online. Once the tax year has ended on 5 April paper returns must be submitted by the 31 October. If you file your return online the filing deadline is extended to the 31 January. Any tax due must be paid by 31 January.
What is included in my Income Tax calculation?
The types of income which are taxed include
- Money and benefits from employment
- Profits you make from being self employed
- Some state benefits
- Most pensions
- Rental income
- Investment income above tax free thresholds.
There are several allowances which can reduce you tax bill. The most common ones are
- a personal allowance of tax free income, and
- allowances for savings and dividend income.
The rates of income tax vary, for the 2018/19 tax year
- income above the £11,850 personal allowance up to £46,350 is taxed at 20%,
- income above this up to £150,000 is taxed at 40% and
- any income above £150,000 is taxed at 45%.
What happens if I have paid too much tax?
If you find yourself in a situation where you have paid too much tax you can request a rebate from HMRC.
We hope you have found this useful. If you have any queries, please get in touch. We’d love to help.