Understanding income tax law

 

If you earn any money, income tax law comes into play. Note that not all income is taxable under the UK’s current tax law. Also, tax law states that you can earn a certain amount of money before you have to pay any income tax. And income tax law allows you to claim legitimate expenses to reduce the tax that you owe.

Income tax law states that a taxable income can include any of the following: 

  • Money you earn from self-employment
  • Any interest you earn on your savings
  • Money you are paid as an employee
  • Any money you earn from stocks or shares you own
  • Rent you are paid
  • Income from a trust

If you are resident in the UK, for tax purposes you will receive what is called a ‘personal allowance’. Under tax law, this is the amount of money you can earn before you have to pay income tax. For the current tax year of 2009-10 this amount is £6,475. This allowance can be higher if you are over 65 years of age.

There are also a number of other influences on the amount of income tax you may have to pay. If you receive any company benefits such as a car, you may have to pay more tax. If you at all unsure about your income tax situation the help of an accountant is highly recommended.

HM Revenue & Customs randomly chooses a number of people each year for an investigation into their income tax affairs. If you are chosen, the help, support and guidance of a tax solicitor can be invaluable. Legal representation is particularly important if you are accused of any wrongdoing with your tax affairs. Never try and represent yourself in these cases, as income tax law is highly complex and in some areas open to interpretation.

If you would like to obtain legal advice about income tax law, Caven can put you in touch with a local specialist tax law solicitor free of charge. So, if you have any questions or would like our help in finding local tax law solicitors please call us on 08001 221 2299 or complete the web-form above.

 

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