Are You a Taxpayer or Not?
If you’re worried about what tax advice to follow as a part of the employed members of society, the first thing to know is that some income isn’t taxable. In fact, people of the UK are taxed on income when they reach a certain level.
When the amount of taxable income is higher than tax-free allowances, that’s when you pay income tax. If your taxable income is either equal to or lower than your allowances, you don’t need to pay income tax and can even be entitled for a refund.
If you’re wondering whether you have to pay tax when you’re 65 or older or want to know if you can get a considerable amount off your tax bill, continue reading.
More Tax Advice – Am I a Taxpayer or Not?
Haven’t got a clue what your taxable income and tax-free allowances are? Here’s how to figure out.
Step one: Get the sum of your taxable income. This can be done by adding your taxable income within one tax year, which is normally April 6 to April 5 of the following year.
Step two: Calculate the sum of your tax-free allowances. Tax-free allowances are comprised of the income you receive without paying tax. Among these allowances are the Blind Person’s Allowance and the Personal Allowance.
Step three: Deduct your tax-free allowances from taxable income. After subtracting, if there’s still an amount left, you’re considered a taxpayer. If nothing is left, there’s no need to pay tax and you should contact HMRC for that refund.
Personal Allowance and Blind Person’s Allowance
Just about everyone gets a Personal Allowance, but this amount increases if you’re aged 65 or older and have an income that’s relatively low.
Blind Person’s Allowance can be claimed if:
· You’re registered as a blind person and are certified bind
· You live in Northern Ireland or Scotland and can’t perform work that requires eyesight. If you’re in a civil partnership or are married and unable to use all of your allowance, it’s possible to give that unused portion to your partner instead.
The bottom line of this tax advice is that allowances can cut down your tax. Another tax advice to remember is that even as a taxpayer, you’re still eligible to receive tax deductible allowances, which can lessen your tax bill. Even better (and if you’re lucky), you won’t have to pay for anything.
What’s Considered Taxable Income?
Here’s a list of what counts as taxable income:
1. Income from partnerships or self-employment – Includes profits from working as a partner or sole trader
2. Income from employment – Income from part-time, temporary, and full-time employment
3. Interest on savings – National Savings and Investments bonds and accounts; and interest from bank and building society
4. Pension income – Retirement annuity; state pension; and personal or company pensions
5. State benefits – Job seeker’s Allowance; Carer’s Allowance; Incapacity Benefit; Weekly Bereavement Allowance; and Employment and Support Allowance
6. Investment income – Dividend on the company’s shares
7. Rental income – From your second property; from a lodger staying in your main or family home
8. Other taxable income – Trust income; and pension bonds
HMRC itself outlined and explained these information and facts about income tax policies. This tax advice is straight from the horse’s mouth, so follow this guide to properly fulfil your tax obligations.