Income Tax is charged on all income arising in the UK, including salary, employment benefits, business profits, investment income and rents received from property. Residents of the UK may also be liable to Income Tax on their income from overseas.
Every individual is entitled to claim a personal allowance which represents the amount of income they can receive without paying tax. Other allowances may also be available, for example married couples where one spouse is aged 65 or over can claim a special allowance. The Child Tax Credit system can also provide families with additional financial help although the amount of support paid depends on the overall financial circumstances of the family and the number of children involved.
Employed individuals pay tax through the Pay As You Earn system (PAYE). This relies on HM Revenue and Customs issuing an accurate code number to ensure that the correct amount is paid over on a weekly or monthly basis. Higher Rate taxpayers in particular need to check coding notices to avoid paying too much and indeed to claim refunds of tax where they are due.
For the self-employed, Income Tax can be a more complex affair. There is the automatic requirement to register your business with HMRC within 3 months of startup, prepare Self Assessment Tax Returns and accounts on an annual basis, and perhaps run a payroll scheme for employees. On the plus side, there is greater scope to claim tax relief on expenditure incurred in running the business and to claim relief for trading losses. We have extensive experience in dealing with all types of business, from sole traders to multi-national concerns.
Contact Matt Bird and Paul Ffitch to see how we can help you get the most from your business.