Payment of UK income tax
Income tax refers to the amount you pay on your taxable income. You pay income tax on money you get from your employment, pensions, rental income, profits from self-employment, state benefits, and income from a trust. On the other hand, you will not be required to pay income tax on tax-exempt accounts, interest on your savings, the first 5000 pounds that you get as dividends, and national lottery wins. There are people who are given a personal allowance on their tax-free income. If you want to know more about income tax, then you have come to the right place.
How to pay your income tax
Pay As you Earn (PAYE) is the most common method people use to pay income tax. The PAYE is the system that the pension provider or employer use to take national insurance contribution or income tax before they pay the wages. The employer knows the amount to deduct because of your tax code. Make sure that you fill tax return in case you have an untaxed income over 2500 pounds. Now that you know how to fill your income tax, nothing should stop you.
Taxable state benefits
Taxable benefits are those benefits that you have to pay tax on. It is important to understand the tax benefits to ensure that you are on the safe side. You are supposed to pay income tax on benefits such as the state pension, carer’s allowance, jobseeker’s allowance, widow’s pension, bereavement allowance, incapacity benefit, and employment allowance. These are just some of the taxable benefits that you need to know about. Now that you are informed about the taxable benefits you should submit the form knowing that these benefits will be taxed.
Tax-free state benefits
The tax-free benefits are those that you do not have to pay tax on. There are state benefits that you are required to pay income tax on; these are pension credit, attendance allowance, guardian’s allowance, disability living allowance, child benefit, maternity allowance, universal credit, war widow’s pension, industrial injuries benefit and, universal credit. In case you receive these benefits, you should rest assured that you will not be taxed on them. You can rest easy knowing that you receive the benefits without any tax obligation. Knowing the tax-free benefits will help you so that you do not over pay your taxes so call the tax credits helpline number if you are unsure.
There are steps that you should follow in case you are wondering if you have to pay income tax. The first thing that you have to do is add the taxable income together with the taxable state benefits. Next is to calculate the tax-free allowances. Deduct the tax free allowance from the taxable income. In case there is any amount remaining, then you are supposed to pay. As such, you should pay tax to avoid the amount piling up. It is vital to do your duty and ensure that your country progresses. It is not rocket science. All you have to do is ensure that you fill your taxes as required by the state department.