Income tax planning
Income tax is the government’s largest revenue and is collected by HM Revenue and Customs. The Act that allows the government to collect this money is the Income Tax Act 2007, though there are other Acts that apply. Income tax planning can allow any person working the UK to manage their assets, so that they pay the least amount of income tax possible. Whilst the amount of money that can be saved is greatest for high earners, most people will benefit from an understanding of how to manage their income to avoid paying too much tax.
A person working in the UK has a personal allowance. This is an amount of money that a person can earn in one year without paying tax. If a person works for an employer, that employer will pay the tax directly from the wages under the Pay As You Earn (PAYE) scheme. When paying tax under PAYE, your personal allowance will be considered each time you are paid, so that you will receive tax relief on each pay packet. If, however, you stop working part way through the tax year, your remaining personal allowance should be offset against the money you have already earned. HMRC are often not good at noticing this and it is always worth filling in the relevant form to claim your rebate of tax paid. Income tax planning can be very complicated depending on how much income you have and its source. Certain investments may produce an income, but you may not be required to pay tax on this at all, or only at a reduced rate.
If you would like to obtain legal advice on income tax planning, Contact Law can put you in touch with a local specialist tax solicitor free of charge. So, if you have any questions or would like our help in finding local tax solicitors please call us on 0800 1777 162 or complete the web-form above.
- Last Updated on 11/07/2012