Getting into the nature of UK taxes can be tricky, but it’s definitely worth doing. Yu might think that other organizations will handle your taxes completely, but this isn’t the case at all. In order to really make sure that you don’t get a nasty note from the HMRC, you will need to think a bit more carefully on UK Tax Law.
Let’s assume that you just started working. Your employer will take out your taxes using the PAYE system, which means that you usually will not have to send in any more taxes as long as enough has been collected over the year. That’s a very important thing to remember. You will need to wait for the end of the year for your income to be calculated in full, as well as your total tax liability. This can be calculated and credit is given for the tax already deducted. You might owe a bit more, but you might also owe a lot less than what’s collected.
Like in the US, you will need to make sure that you start looking at whether or not you’re going to get a refund. If you are indeed going to get a refund, then you will definitely want to file. If you already know that you aren’t going to get a refund and you paid just enough, then you can avoid filing if that’s what you want to do. It is not mandatory for everyone to file a return, just those that either want to receive their refund, or those that are looking to pay their taxes in full.
There are different tax bands that apply depending on how much money you have made for the year. There is a tax-free personal allowance which takes away some tax liability, but most people will still make more than this.
What about income from other sources? If you have investment income, this means that you’re getting interest from savings or dividends from holding shares. Interest is going to be taxed at source and you’ll get the net proceeds. It’s still important to make sure that you declare your income appropriately.
Navigating the income tax waters can be tricky at first, but there’s no need to think that you have to try to do it and all of your other taxes on your own. If you’re in a high tax band and you need help making sense of all of your taxes, then going to an accountant would be the best thing that you can do.
Good luck! Once you get used to handling your taxes, you’ll find that the process definitely goes faster over time. It’s all about the records that you’re able to keep!