NBAS Chartered Accountants Belfast |Northern Ireland

Income Tax Management

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What is income tax?

Income tax applies to anyone living or working in the UK and earning above a certain amount of money each year (currently £12,500). More specifically, both individuals and companies pay income tax on all earnings where the amount of earnings exceeds a certain threshold.

Income tax is paid on your net income, which is after taking into account any expenses or losses incurred during the period for which you are paying income tax. For example, if you own a car which costs £15k per year to run but gives you an annual saving of £10k by not having to use public transport, then this saving would be deducted from your taxable income when calculating how much IHT should be payable on it.

In the UK, there are different income tax rates based on how much money you earn each year.

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The basic rate of income tax is 20%.
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The higher rate of income tax starts at £31,500 and is 40%.
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An additional rate of income tax applies to annual earnings over £150,000 and can be as high as 45%.
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Income Tax Management
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How does Income tax apply to me?

If you are employed, your employer will deduct income tax from your wages and send this money to HMRC for you. In addition to paying income tax, many employees also have National Insurance contributions deducted from their pay cheques.

If you are self-employed or run your own business or partnership, then it’s up to you how much income tax you pay – whether through PAYE (Pay As You Earn) or self-assessment.

You will need to complete a Self-Assessment Tax Return if you are self-employed, earn over £100,000 per year or have more than one job and earn over £50,000 from them. 

So if you're looking for a Self Assessment Accountant, NBAS can advise you on whether this applies to you and help with your return if it does.

I’m self-employed, but I’m not sure if this applies to me?

If you have more than one job and your total earnings from this exceed £100,000 then you need to register for Self-Assessment. Otherwise, additional payments may be due when completing your Self-Assessment Tax Return with HMRC which could lead to penalties for late payment as well as interest accrued until they are paid. We recommend getting in touch to get some expert advice if you have any concerns or queries about the process.

You must submit a self-assessment tax return by 31st January following the end of every tax year (5th April every year). If you fail to submit a return within three months of its due date, this will result in late filing penalties. The penalty will be 100% on any balance outstanding after three months but reduced by 50% if paid within nine months and 25% if paid after 12 months.

Our team here at experienced in the ins and outs of all tax queries, Please enquire if you're requiring expert advice from a Self Assessment Accountant.

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