One has spent the entire year working hard and hasn’t paid income tax that time. For many, this is a blessing in disguise as it gives them more time to save for retirement or just live within their means(tax bill). However, others who want to take advantage of this loophole are making serious decisions based on their calculations about potential future earnings and personal circumstances. Calculate tax rebate, and manage your tax.
What Should You Do?
So what exactly can one do if they have not yet paid income tax? The answer is Limited amounts. And it depends on whether you have an employee earning from a salary (salary) or did self-employment taxes and VAT.
This is because the UK government does not hold records on people not paying income tax until long after payments are due – this is only being kept by financial institutions, who may keep data up to two years after payment is due. Therefore, we must rely on those who pay these taxes (like HMRC) to determine how much money could be saved under such circumstances.
How much can you legally reduce your tax bill? A limit of £3,000 per year (equivalent) should be enough, but you should also try to pay it off as soon as possible since interest charges may make this amount much higher over time!
The Government Will Reduce Your Tax Liability
The Government will reduce your tax liability by the amount of tax relief you are entitled to. You must claim any tax relief at the same time as you pay income tax and national insurance contributions.
Tax Reliefs Include
Basic Rate Relief (BRR) – If you have income earned from employment or self-employment, this is deducted at source before calculating your taxable income for that year. BRR reduces how much of your income is subject to tax, which means that if an individual has a higher rate band than someone else who does not have any earnings from work or self-employment, then their total tax bill will be lower because they have less cash available for PAYE purposes – even though both individuals may have been paid the same amount per week during the year.
You Must Claim Any Tax Relief at the Same Time
You must claim any tax relief at the same time as you pay income tax and national insurance contributions. If you don’t claim tax relief, then it won’t be paid to HMRC. If you don’t pay tax, then there won’t be any money left over for the Government to spend on things like schools or hospitals – which means someone else will have to make up for it! And if your employer doesn’t pay national insurance contributions (NICs), then this would mean that he could save even more cash by paying fewer NICs.
Calculating the Amount of Tax Relief
Calculating the amount of tax relief you are entitled to be simple. First, divide your income by the amount of tax you pay. Then multiply this figure by 100 to estimate how much tax relief you will receive.
Calculating Tax Relief
To calculate your allowance and/or additional rate band, simply multiply your taxable income by any one of these numbers.
You’ll Get a Tax Rebate if Your Basic Rate is Above £10,000 Per Year
You can get a tax rebate if you’re above the basic rate. Your refund is calculated as a percentage of your previous year’s taxes.
- Income: The more you earn, the bigger your tax bill. This is because as your income increases, so does the amount of tax that must be paid to HMRC (Her Majesty’s Revenue and Customs). So if someone earns £20k per year and pays £2k in taxes each year, they would receive a full 100% refund on their 2011/2012 taxes!
- Tax liability: Your total annual income should be added before any deductions are made, like childcare payments or pension contributions (if applicable). Once these have been deducted, then it can be compared with what was left over after all other costs were taken into account, such as mortgage repayments etc. If there was still some room left over, then this would mean less money being spent on reducing one’s debt load, potentially leading to achieving financial freedom sooner rather than later!
You’ll Get a Tax Rebate if Your Basic Rate is Below £17,000 Per Year
For 2012/2013, you’ll get a tax rebate if your basic rate is below £17,000 per year. This means that if you’re in the lowest tax bracket of 20%, and earn £15,000 per year or less in income (that’s the figure when calculating how much tax should be paid), then you can claim a tax rebate of £1,000.
You Can Save Money on Your Taxes by Calculating the Relief
You may take steps as a taxpayer to lower your taxable income and, therefore, your tax liability. What you may save on costs by doing this would surprise you. There are several ways that people reduce their liability and/or burden on the Government. Some of these include increasing income through investments or other means; reducing expenditure by getting rid of luxury items; taking advantage of tax-free allowances such as pension contributions and student loans etc.; claiming back expenses incurred during research projects into potential job vacancies (this is called ‘business mileage‘).
