What is income tax?

A dictionary definition and its simplest explanation, income tax is the tax levied on personal income that you earn.

What is personal income?

Personal income that is taxed in this way is made up of:

Continue reading “What is income tax?”

The budget and the PAYE

Chancellor holding the iconic red breifcaseEvery year when the budget comes out you hear about taxes going up, the economy growing and unemployment going down. If you’re in employed work and receiving a monthly salary you might not really understand or care how the budget affects you. However, the salary you receive in your bank account is what you get after your employer has taken the PAYE. Your PAYE is made up of your national insurance contributions and income tax.  Continue reading “The budget and the PAYE”

My Top 5 Accounting Blogs

Here are my top 5 accounting blogs and why I like them.  There are a lot of other people that I do admire in the tax and accounting world who are not listed here as they don’t blog or they don’t have a website.  However, as I like to blog, I tried to focus on bloggers only.

Continue reading “My Top 5 Accounting Blogs”

Why Pay Class 3 National Insurance Contribution?

Class 3 National Insurance Contribution (NIC) is a voluntary contribution that you can make if you have gaps in your NI history.  One of the main reasons that you would want to make a voluntary contribution is in order to ensure you receive your full basic state pension. However, this is a voluntary contribution and you are not contracted to pay it unlike the other national insurance classes. Continue reading “Why Pay Class 3 National Insurance Contribution?”

Where’s my profit?

In its simplest definition, profit is the difference between the sales you have made less the expenses incurred in bringing the product or service ready to sell.

 Sales – Expenses = Profit

The profit is what you get taxed on whether you are a limited company (corporation tax) or a sole trader (personal tax). So let’s have a look at all of these three things in a bit more detail. Continue reading “Where’s my profit?”

Reporting your personal pension contribution

If you have taken out a personal pension plan, do not forget to include this in your tax return.  If you are a basic rate tax payer, it will have no effect but if you are a higher rate tax payer, you will benefit from some tax savings. Continue reading “Reporting your personal pension contribution”

The Pain of Class 2 National Insurance

A change in tactic in my blog post today and hopefully going forward.  Once a month, I’m hoping to post a technical accounting or tax related post.  At the moment, I have no schedule for it and it will most likely be on what takes my fancy or what I had to deal with in that month.  So, for today, I’m going to look at national insurance and  in particular Class 2 NIC. Continue reading “The Pain of Class 2 National Insurance”