Personal Income Tax Accountants
Understanding how Income Tax works can seem confusing, particularly when you’re first starting out in the workplace. Knowing how Income Tax and Personal Allowance work will allow you to figure out if you’re being paid the right amount and help you budget.
What is Income Tax?
Income tax is a type of tax that UK taxpayers pay to the government based on their earnings. You are taxed not only on your personal income but also on other sources of income such as dividends and interest from savings over a certain amount. If you’re self-employed, you’ll pay taxes on any profit you make including income from products and services that you sell online. Hysons, Chartered Accountants can provide help in calculating the tax owed and advice on the best planning options available to keep you on top of your income tax.
How is Income Tax Calculated?
Income tax is divided into various bands. Your income tax will be calculated based on your tax bracket. The more you earn, the higher your tax band, which means you'll pay more in income tax. Income tax bands are intended to make taxation as equitable as possible for everyone so that those who earn the most contribute the most.
What are the Tax-Free State Benefits?
Tax-free state benefits are benefits that you can earn without having to pay income tax. The following are the most common state benefits.
- Attendance allowance
- Bereavement support payment
- Child benefit
- Child tax credits
- Income-related employment and support allowance
- Industrial injuries benefit
- Lump-sum bereavement payments
- Maternity allowance
- Pension credit
- Personal independence payment
- Severe disablement allowance
- Universal credit
- War widow’s pension
- Winter fuel payments and Christmas bonus
- Working tax credit
- Disability living allowance
- Guardian’s allowance
- Housing benefit
- Income support
Other state benefits, such as jobseeker’s allowance and your state pension, are taxable, so they should be included if you have to complete a self-assessment tax return.
What is a Tax Self Assessment?
Depending on your income levels or different incomes sources, HMRC may notify you that you are required to complete and income tax self assessment. Once you receive this notice you are obliged to fill in all the details of your income via the HMRC self assessment portal. You will need to register for an online account, if you don’t already have one. You will be asked a series of questions designed to uncover all your sources of income to ensure you are paying the right amount of personal tax.
If you haven’t been notified by HMRC but you have income outside of your main employment where tax isn’t deducted, then you may have to voluntarily register for self assessment. Our income tax chartered accountants can provide advice if you aren’t sure.
Do I Need an Accountant to do my Self Assessment?
If your income is limited to earnings from your full time job and maybe some saving interest, then its perfectly possible to do your own self assessment. However, if your income is more complicated then this is where an accountant can help. Or if you just don’t want the hassle of doing your own income tax accounting then we can help.
What Income do I need to Declare?
When doing your personal income tax then HMRC are interested in all of your income streams whether it be from employment, shares, property, bank interest, sales of assets etc. There are specific areas where you don’t pay tax such as within ISAs, but may earn income where one of our personal income tax services may help.
If I Have Overseas Income Does This Need Declaring?
The short answer is it depends. Overseas income can be complex depending on your own country of residence plus whether tax is withheld at the source country.
It's always best to get professional advice from our income tax chartered accountants to make sure you are following the rules and don’t end up with penalties or fines.
How Hysons Can Help With Income Tax
At Hysons, Chartered Accounts, all our tax accountants are fully certified, ensuring we provide expert advice to help reduce your tax liability as much as possible and keep you on the right side of HMRC.
Talk to our team of expert accounting consultants in Hampshire to see how Hysons can help your business.