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> Income Tax - UK Guide
 Introduction
Income tax is a governmental tax that is calculated on income. It is paid by both employed and self employed people that are earning over a certain amount, and often even those on any other type of income such as a pension. The full amount of income is usually not subject to tax, as you can earn tax free up to a certain level of income.
Who does this type of Tax effect?
This type of tax will affect anyone that is earning an income over a certain level. This includes employed people, the self employed, and those receiving another sort of income such as a pension. For those that are employed, the income tax is normally taken before wages are received. The self employed must calculate their own income tax each year, or hire an accountant to do so.
Overview
For those that are employed, income tax is calculated before their wages are paid, and the wage slip should outline how much income tax has been paid for the month/week. The self employed are responsible for paying their own income tax, and must calculate this themselves or through an accountant. There are a number of steps involved in doing this, which include:
Calculating your total earnings for the year
Deduct any tax exempt income, and also any tax deductible income (such as sums used to purchase items for your business)
Make sure that you have deducted any allowances to which you are entitled, any tax deductible income, and any tax exempt income, and then multiply the remaining figure by the current tax rate. This will tell you how much you have to pay for that financial year.
How much tax should I pay?
The amount of tax that you will be liable to pay will depend upon your earnings and your circumstances, as well as the type of income you are receiving. You should ensure that you are familiar with all tax allowance and exemptions to which you may be entitled, and remember that everyone is allowed a certain amount of tax free income. Tax rates will vary depending on how much taxable income you earn, and you may find that part of your income is calculated at the lower rate, and part of it at a higher rate. Tax can be a very complicated subject, but in order to avoid penalties is it vital that you pay your taxes on time each year. For the employed, this is usually done automatically. However, if your tax is not automatically deducted (e.g. if you are self employed) then you may benefit from hiring the services of a tax accountant to ensure that you avoid any unnecessary penalties.
Tax Tips - Can I benefit from any type of allowances?
There are a number of allowance and exemptions available with income tax, and these are dependant upon your income and circumstances. Although you can get tax rebates if tax is overpaid, you should look into any allowances t which you may be entitled, as this could save you some money in income tax payments. This can come under tax allowance, tax relief, or tax exemption.
Further Reading
For further information relating to income tax visit the Inland Revenue at: http://www.inlandrevenue.gov.uk/leaflets/c1.htm
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