There are, as the old saying goes, two things that are certain in life: death and taxes. Given that the average UK worker spends several thousand pounds a year in tax, it is important that you are aware of your rights and responsibilities. Tax can be a confusing area. Thankfully, TheTaxGuide is here to help you navigate the intricacies of the UK tax system.

Businesses and individuals are affected by tax in a range of different ways. So whether you are trying to work out how much your business should pay, understanding stamp duty, how to claim a refund, or simply how to cut your tax bill, TheTaxGuide is here to help.

1. How much personal tax do I pay?

There are two main levies that taxpayers in the UK have to pay: income tax and National Insurance Contributions (NICs). If your income in any tax year exceeds the personal allowance threshold, you will pay income tax on the amount you earn above that limit. Similarly, NICs are paid by anyone whose earnings exceed the weekly, monthly, or annual National Insurance Lower Earnings Limit.

If you are an employee, you will almost certainly pay tax through the Pay As You Earn (PAYE) system. This means that your tax payments are taken directly from your wage packet.

2. What if I’m self-employed?

Self-employed people also pay both income tax and NICs – but they pay them in a different way. The self-employed are required to complete an annual Self Assessment tax return, which asks for details of income and expenditure. Completing the form can be daunting, so TheTaxGuide has compiled a step-by-step guide to help you through the process.

Once you have completed your Self Assessment, you may be required to pay a bill. There are two payment deadlines during the year. The first is on January 31st – the day on which your Self Assessment is due. The second is July 31st. On this date you need to make a ‘payment on account’ against your next bill. We have put together a primer that explains the payment on account, and how to reduce it.

3. What about savings and investments?

The tax implications of savings and investments are complicated and often misunderstood. It is true that there are many ways in which you can minimise the amount of tax you pay on your savings – or even eliminate the tax burden altogether. ISAs are a particularly popular product for tax-efficient saving, for example.

But you should understand that tax may be charged on your savings and investments. For example, you might suffer a tax liability when you sell shares, receive dividends, earn interest in a bank or building society account, or receive income from an investment held abroad.

4. What are tax credits?

Tax credits are payments made by the government to certain qualifying groups. As the situation currently stands there are two tax credits available: the Child Tax Credit and the Working Tax Credit.

Your entitlement to tax credits will depend on your circumstances. TheTaxGuide offers information on those payments, along with guidance on repayment claims. You should note, however, that the government is considering introducing a ‘universal credit’ system, which could see individual tax credits phased out.

5. I’ve paid the wrong amount. What can I do?

Incorrect tax payments are a sad fact of life – and they can also be difficult to rectify. Since the installation of HM Revenue and Custom's new computer system, millions of taxpayers have received letters telling them they have paid the wrong amount. We have put together a guide to help you deal with tax demand letters, explaining how to respond – and outlining the circumstances in which you might not have to pay the bill.

You should also make sure that you understand your tax code, as an inaccuracy in this piece of information is one of the most common causes of overpaid tax.

6. What about students?

There is a common misconception that students don’t have to pay tax. In fact, if you earn more than the personal allowance, you will have to pay like everyone else. But income tax for students can be confusing, particularly if you have found yourself being taxed when you should not be. We have compiled a guide to student tax, including some tips to help you get back the money you might be owed.

7. Is there a tax on pensions?

Sadly, your tax liabilities don’t necessarily stop when you finish working. Pension income is also taxable – and many retirees find that they still end up with a tax bill at the end of each year. TheTaxGuide is here to help you navigate the pension jargon, from defined benefit schemes to group personal pensions, and ensure that you understand both the tax you might have to pay in retirement – and the significant tax relief available on pension contributions while you are still in work.

8. Do I have to pay a ‘death tax’?

Inheritance Tax is a thorny issue, with politicians constantly using it to score points. But despite pressure, we still have the ‘death tax’. If the value of your estate exceeds the Nil-Rate Band, there may well be a tax liability. But it is important to understand that you can cut your Inheritance Tax bill with a variety of techniques, including the use of exempt and potentially exempt transfers, gifts and trusts.

9. Which taxes do businesses pay?

It’s not just individuals who pay tax. Businesses have a range of tax responsibilities, and these can quickly become complex and confusing. Incorporated companies have to pay corporation tax on their profits. In addition, firms might have to pay Capital Gains Tax. If they employ people, they may also have to make National Insurance Contributions on their employees’ behalf.

There are ways, however, in which firms can cut their tax liabilities. In addition to the deduction of expenses from their income, they might also consider the small business rates relief scheme to minimise their business rates bill.

10. What is VAT?

Value Added Tax (VAT) affects both businesses and individuals. Individuals have to pay VAT on a wide range of purchases, and the tax is often criticised for being regressive. But it is here to stay – and, as our guide shows, the recent VAT increase has only increased its impact.

Businesses also need to consider the implications of VAT. If a firm’s turnover exceeds a certain threshold, it will be required to register for the tax. In addition, businesses sometimes choose to register voluntarily before they reach that threshold – either in order to save money or to give the impression of size.

11. Do I need an accountant?

In many cases, tax responsibilities can become overwhelming. Many people consider taking on an accountant, either because they don’t have time to deal with their tax affairs or because they want to get on with other, more enjoyable things!

TheTaxGuide offers some pointers to help you find the right tax accountant. There are many factors to consider, including whether or not you require book-keeping work, and whether the accountant has any specialist knowledge. Additionally, we have guides to help you find professional tax planning advice. If you are concerned about Inheritance Tax and related issues, you may be interested in our article on finding and choosing an Inheritance Tax planning advisor.

12. How can I cut my tax bill?

With taxes seemingly constantly on the rise, many people are understandably keen to reduce the amount they end up paying into the Exchequer. Thankfully, there are many perfectly legal ways in which you can cut your tax bill.

TheTaxGuide contains hints and tips to help you reduce your outgoings if, for example, you are a lower paid worker, or if you are in training or education. In addition, it offers information on things like pension tax relief, employee interest free loans and tax efficient savings – all of which could help you cut your tax bill. Finally, a series of 10 top tax saving tips should be able to help get you on the path towards more affordable tax payments.

Tax is an important and complicated area. If you are unsure about your responsibilities, you should contact HMRC or a professional advisor. In addition, you should remember that everybody’s circumstances are different.

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