Tax advice online UK - calculations and planning

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Tax is one of the areas of UK personal finance that most people dislike the most. It is a complex and potentially frustrating subject, and although the majority of us pay a great deal of tax, very few of us really understand the way the system works.

Here you will find some useful, un-complicated online advice, from the basics of tax and why we pay it, to tips on filling in your tax return, calculations, planning, and how to get professional help.

How do I pay tax?

This may come in the form of VAT (Value Added Tax) on goods and services or on the income tax that is deducted from our wages or salary each month. Tax is also levied on the sale of property, on inheritance money. In fact just about everything in our life is taxed in some way or other.

So why do we pay tax?

The government funds this country's public services by charging us tax. Areas like health, social security and education would be impossible to fund if none of us were charged tax.

Why is it that some individuals are not charged tax?

Not all taxes apply to everyone. For example, somebody who earns less than a certain amount will be exempt from paying income tax. This amount is £4,745 for financial year 2004 - 2005. Other people, such as those who own their own business or are self-employed, will be eligible for tax claims and can claim a high proportion of VAT (Value Added Tax) back.

Does everyone have to calculate their own tax?

The majority of people in this country are employed by a company and receive income through the PAYE system (Pay As You Earn). This system is designed so that tax is automatically deducted by working out your tax code and hence how much money goes to the tax man each month. Therefore your salary is only paid into your bank account once tax has been taken away, and you will be able to view how much this is on your pay slip which also includes information about other deductions such as National Insurance payments, as well as any pension contributions you make. Because of this, it is only those who are self-employed or a company director, or those with complicated finances who will need to fill in their own tax returns.

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