A Quick Guide to the UK Tax System
Taxation is one of the important aspects for any of the countries in the world. The tax system differs from one country to another. If you are planning to live in the UK then you might have a question: Does the UK have income tax? Yes. Like most countries, the UK also has a proper tax system too. The UK tax system has a little different structure which you may find difficult to understand if you are new to this country. Whether you like it or not, every individual has to comply with all the taxation as per the rules of the country. If you are liable for the tax payment in the UK then you need to do a survey of the UK tax system. It can allow you to comply with all the tax-related aspects. It is difficult to cover all the tax-related aspects in the UK here. However, we will still put some basic and important tax aspects in the UK here.
UK Tax System
HM Revenue and Customs (HMRC) looks after the tax administration and is responsible for collection of the taxes in the UK. HMRX looks after the total tax in the UK. The tax year of the UK is from 6th April to 5th April the following year.
Tax system guide of UK
Broadly, the tax system in the UK is categorized into two types: National Insurance (NI) and Pay as You Earn (PAYE).
What is National Insurance (NI)?
Anyone who is above the age of 16 years has to pay the national insurance mandatory. This person must be earning a salary of more than £184 a week or he is making profits of £6,515 as a self-employed. NI contributions allow you to get the benefits of State Pension and other benefits. The classes determine your earnings and employment status. It is important to understand the type of classes you fall in while you pay these taxes.
What is Pay as You Earn (PAYE)?
This works on the simple principle, the more you’re earning, the more tax you need to pay.
Here is the detailed guidance on Pay as You Earn (PAYE):
– The first £12,570 income in a financial year is free from tax and this is usually considered as the personal allowance.
– The income which is between £12,571 to £50,270 is taxed at 20%.
– Income between £50,271 and £150,000 will need to pay 40% as the tax.
– If your income is more than £150,000 then you will have to pay 45% tax.
How to apply for the UK tax refund?
You may be entitled to the tax rebate for several reasons like having the wrong tax code, stopping working, changing the job, or having the wrong tax code. Depending on the criteria, you can claim for the HMRC yourself or through any specialist.
The above tax system guide will definitely have all the broad information of the tax system in the UK. However, the UK tax system is a little complicated with different criteria, classes, and other aspects, it is not always possible for everybody to understand it. In these circumstances, getting advice from the experts can help you to comply with the tax and other accounting aspects. The experts will guide you properly to meet the tax requirement of the UK properly.
Meru Accounting provides consulting services to meet the UK tax system. They have a team of expert individuals who are well-acquainted with the UK tax system. They can give a better tax system to the UK Tax System. Meru Accounting is a popular accounting service providing agency with clients all over the globe.
