uk income tax
The definition of income tax is very universal and simple- a charge on your income that you generate from all your income sources.However your entire income is not taxable.There is certain limit on your income and if you earn more than this limit you become liable to pay the income tax.There are certain other respites and allowances which are helpful to reduce your income tax burden.Some people do not have to pay the income tax as their income from all sources does not extend beyond the eligible income limit.
TAXABLE INCOME IN UK:
In United Kingdom, a taxable income is counted on the basis of the following criteria:
A taxable income in UK includes your earning from your job or your employment. If you are an entrepreneur your income tax is decided on the basis of the income you earn from your business.If you are drawing a pension beyond a non-taxable income limit you are liable to pay tax on the surplus pension income.If you have deposited your money with a bank for a specific time period, then the interest you earn is taxable.In UK certain types of savings are taxable.Earning in the form of dividend on your shares is always taxable in UK.If you are earning money from your real estate, then even this income is taxable in UK.If any government registered trust or a non governmental organization is paying you any remuneration, then this income is taxable in UK.
NON-TAXABLE INCOME IN UK:
As per United Kingdoms Tax Laws income from certain sources is not taxable.You never have to pay any tax on this sort of income.Income sources like special pensions i.e.war widow pension, war handicappers pension, gallantry pensions etc.are exempted from tax.Also certain other benefits like the special performance pension for showing outstanding performance in the international sports, international tournament prize money etc.are free from tax in UK.Many people earn money from the tax exemption accounts, which is a non taxable income in UK.
TAX REliEFS AND ALLOWANCES IN UK:
In UK, if any of the spouses is born on or before the 6th April 1935, then there is a tax allowance in the form of married couples allowance for the taxable income of such couples.There is also a maintenance payment relief allowance for the taxable income of such couples, in case if they are legally separated.All sorts of pension contributions deducted from the salaries of the employees are non taxable in UK.All sorts of philanthropically made donations are non taxable in UK.There is permission for the residents of UK to earn tax free personal allowance on the amount of taxable income, every year.But there is a set limit for this tax free basic personal allowance, and for the people who are above 65 years age, the limit is higher.Special tax free allowances are available for the handicapped and blind people, in UK.Income tax is chargeable for the income which is higher than all the above mentioned allowances.
CALCULATION OF DUE TAX:
In UK tax is calculated by taking into consideration your income after subtracting the tax free allowance and any other deductible allowances.There are different tax rates and different tax band series for different categories of people.
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