| There are many websites on the Internet today | | | | relief on any of the money you have spent over |
| that gives much needed income tax help for | | | | the year (tax relief usually applies to people who |
| those who have no idea of what's going on during | | | | are self-employed and have to buy items for the |
| tax time. Income tax is a tax paid on income, | | | | business). Deduct this tax relief. This leaves |
| unfortunately no matter how little it is. It's paid by | | | | income on which tax may be payable (taxable |
| employees and people who are self-employed and | | | | income). |
| may also be payable if you are not working but | | | | Step 3: Work out which tax allowances you are |
| you have an income, such as a retirement | | | | entitled to. You will be entitled to a personal |
| pension or an occupational pension. Not all types | | | | allowance (plus age related additions if |
| of income are taxable and it will seldom be the | | | | appropriate). These allowances are deducted at |
| case that all of your income is taxed. There is no | | | | this stage in the calculation. |
| minimum age at which a person becomes liable to | | | | Step 4: Multiply the taxable income by the correct |
| pay income tax. What matters is your income. If | | | | tax rate. This gives the tax due to be paid that |
| this is below a certain level, no tax is payable. | | | | year, unless you are entitled to married couple's |
| There is actually no single definition in tax law of | | | | allowance for over 65 year olds. |
| income. Income tax law divides various types of | | | | Step 5: If applicable, deduct the appropriate |
| income into schedules. If an item comes within a | | | | percentage rate of married couple's allowance for |
| schedule it counts as income and income tax | | | | over 65 year olds. |
| must be paid on it. The way the tax must be paid | | | | Some income is exempt from income tax, which |
| will depend on which schedule it falls into. The | | | | means that tax is never paid on this income. This |
| most common schedules are Schedule E for | | | | income should therefore be put to one side |
| employees and Schedule D for the self-employed. | | | | before any tax calculation can be done. Examples |
| There are five main steps in calculating income | | | | of income which is exempt from tax include |
| tax:- | | | | premium bond prizes, housing benefit, child benefit |
| Step 1: Add together all your yearly income, | | | | and profit-related pay. It is therefore necessary |
| including social security benefits, income from | | | | to check whether any income is exempt from |
| renting out accommodation, wages, occupational | | | | tax before doing a tax calculation. For more |
| pension, interest from bank and building society | | | | income tax help, all the help you need in on the |
| accounts. | | | | internet. The IRS itself can give you income tax |
| Step 2: Take off any income which is exempt | | | | help and answer any tax questions you may |
| from tax. Calculate whether you can claim tax | | | | have. |