Tax is paid on incomes such as:
Tax is not to be paid on incomes such as:
The majority of the populace in the United Kingdom have an Individual Allowance or income that is free of tax. This happens to be the income amount you could have prior to paying your tax.
Furthermore, the amount paid for tax can also be reduced by tax reliefs should you be eligible for it.
Income Tax if you live in Scotland
However, inhabitants of Scotland might have to pay a different rate of income Tax from April 2016
Current rates and allowances
The amount you pay each year on income Tax is based on:
The current tax year runs from 6 April 2015 to 5 April 2016.
Your tax-free Personal Allowance
The amount of income you don’t have to pay tax on is £10,600. That is the standard Personal Allowance.
Should your birth date be before 6 April 1938 or should you get a Blind Person’s Allowance, your Personal Allowance may be bigger. However, It will be smaller should your income be more than £100,000.
Income Tax on savings and dividends
Interest on savings is by default taxed at 20%. If you are on a low income, it is possible to get tax-free interest or a portion of the tax back. Additional rate tax payers will have to pay more tax.
Perhaps you own shares in a company, and you are a higher rate tax payer? Then you must pay additional tax on dividends.
Paying lower Income Tax
Should you be eligible for them, you may be able to claim Income Tax reliefs.
If you are in civil partnership or married
It is possible for you to claim the new Marriage Allowance in order to reduce the tax of your partner in the event that your income is lower compared to the normal individual Allowance.
If you fail to claim your Marriage Allowance and either you/your spouse were born earlier than April 6, 1935, you may likely claim Married Couple’s Allowance.
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