{"id":5143,"date":"2023-05-11T15:12:58","date_gmt":"2023-05-11T15:12:58","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=5143"},"modified":"2023-05-11T15:12:59","modified_gmt":"2023-05-11T15:12:59","slug":"what-do-you-need-to-know-about-income-tax","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/what-do-you-need-to-know-about-income-tax\/","title":{"rendered":"What do you need to know about Income Tax?"},"content":{"rendered":"<p>If you\u2019re feeling unsure about your Income Tax obligations, it&#8217;s important to understand what you are required to pay, how you pay it and what to do if you haven\u2019t paid enough or have paid too much.<\/p>\n<p><!--more--><\/p>\n<p><strong>What is Income Tax? <\/strong><\/p>\n<p>There are several things you will pay Income Tax on.<\/p>\n<p>These include:<\/p>\n<ul>\n<li>Money from employment or self-employment<\/li>\n<li>State benefits<\/li>\n<li>Grants and support payments made to your business<\/li>\n<li>Pension payments<\/li>\n<li>Rental income<\/li>\n<li>Income from a trust<\/li>\n<\/ul>\n<p>Most people in the UK get a tax-free Personal Allowance (currently \u00a312,570). For most people, this is the amount of income you can have before you pay Income Tax.<\/p>\n<p>However, those earning over \u00a3100,000 need to be aware that your Personal Allowance is reduced by \u00a31 for every \u00a32 that your adjusted net income is above \u00a3100,000.<\/p>\n<p>If your income exceeds \u00a3125,140, this means your allowance is \u00a30.<\/p>\n<p>You will be taxed on your marginal rate:<\/p>\n<ul>\n<li>If you earn up to \u00a312,570, you will pay 0 per cent income tax<\/li>\n<li>If you earn \u00a312,571 to \u00a350,270 you will pay the basic rate tax of 20 per cent<\/li>\n<li>If you earn \u00a350,271 to \u00a3125,140 you will pay the higher rate tax of 40 per cent<\/li>\n<li>If you earn over \u00a3125,140 you will pay the additional rate tax of 45 per cent.<\/li>\n<\/ul>\n<p>Under this system, if you are classified as a higher rate taxpayer, then you would pay Income Tax at a rate of 40 per cent on all earnings between \u00a350,271 and \u00a3125,140.<\/p>\n<p>For the lower part of your earnings (between 12,571 to \u00a350,270) you&#8217;ll still pay the appropriate 20 per cent rate of tax and anything below that will benefit from the personal allowance depending on your entitlement to this.<\/p>\n<p><strong>How can you pay Income Tax? <\/strong><\/p>\n<p>Most people pay Income Tax through Pay As You Earn (PAYE).<\/p>\n<p>This is when your employer or pension provider takes Income Tax and National Insurance payments before they pay your wages or pension.<\/p>\n<p>You will have a personal tax code, which tells how much should be deducted.<\/p>\n<p>However, there are many taxpayers, such as people who are self-employed, who must report their income via their Self-Assessment tax return and make tax payments directly to HM Revenue and Customs (HMRC).<\/p>\n<p>From 2026, if you have business and\/or property income of \u00a350,000 or more you will need to follow the new Making Tax Digital rules for Income Tax Self-Assessment.<\/p>\n<p>This will require you to complete quarterly tax statements digitally using HMRC-compliant software and complete an annual tax return.<\/p>\n<p><strong>If you need advice on Income Tax and your obligations, contact us today.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019re feeling unsure about your Income Tax obligations, it&#8217;s important to understand what you are required to pay, how you pay it and what to do if you haven\u2019t paid enough or have paid too much.<\/p>\n","protected":false},"author":2,"featured_media":5146,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125,40],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5143"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=5143"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5143\/revisions"}],"predecessor-version":[{"id":5144,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5143\/revisions\/5144"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/5146"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=5143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=5143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=5143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}