These are tax free amounts set by the government every year. The basic and most common is the Personal Allowance which is available to everyone resident in the United Kingdom for tax purposes. We have asked questions to allow us to discover if you are eligible for any others.
At source or with deduction:
Many income items have tax deducted before they are received by you some examples are, PAYE, Construction Industry Scheme (CIS), most bank interest. If you have any tax deducted from you on income please ensure we know about it as you will receive credit for having paid it.
Basic Rate Tax:
The standard percentage of tax that you pay, currently 20%. This means you pay 20p for every £1 taxable at the basic rate.
Items which you buy either to be able to carry out your business such as tools, insurance and travelling expenses. Other items which you choose to buy for the benefit of your business, such as mobile phone, advertising. Our questions are designed to guide you through everything we normally see but if you have bought something which you believe to be a business expense but we haven’t got a section please place it in the other information section.
Construction Industry Scheme:
Tax scheme regulating payments from contractors to subcontractors in the Construction Industry. In effect, an individual subcontractor should be registered with the Tax Office, and the contractor must deduct tax at source (currently 20% or 30%) before making a payment. Each payment and tax deduction should be recorded monthly to HMRC and a payment voucher given to the subcontractor.
Companies reward their shareholders by making payments to them, these are known as dividends, if you have shares in large companies such as Barclays or BT this question will be relevant.
Enquiry or Investigation or Checking:
The HMRC carries out targeted and random checking of Income Tax returns, it is usual for HMRC to suspend any release of tax owed until these checks are completed.
Also known as “Authorising your agent”. With this form of authority a taxpayer allows the tax office to exchange information with us, and to deal with them on any matters within the responsibility of HM Revenue & Customs. In practice we always try to use the online authority procedure but may have to ask you to sign this form in some circumstances.
If you have made a charitable donation or sponsored someone for charity it is likely you were asked if you were a taxpayer and to tick a gift aid box. If you have please enter those sponsorships or donations in this section.
There are many different benefits given by the government but we are only interested in those which are taxable. Please do not enter any form of tax credits, but please do enter anything received via the Department of Work and Pensions (formerly DSS), such as jobseekers allowance, employment support allowance etc.
Hire purchase or other finance:
There are many different forms of finance for buying a vehicle, for our purposes they are all the same so please do not concern yourself with the specific type, please answer the further questions.
Individual Voluntary Arrangement (IVA):
This is a commonly TV advertised arrangement to clear upto 75% of your debts and pay the rest over 1 to 5 years. Use of this arrangement can mean any tax you are owed will be added to your settlement with your creditors.
National Insurance Number:
Everyone legally allowed to work n the UK is issued with a number, known as NI number, this is in the following format (AA 12 34 56 C) and can be found on your payslips, tax return and much other financial correspondence
National Insurance- Class 2:
This is a flat rate charge paid by all self employed people unless they earn below a small threshold. The rate is currently £2.70 per week and can be paid weekly, monthly or quarterly.
National Insurance – Class 4:
These are paid by an individual who is self employed and are based on a percentage of profits above a lower limit currently at a rate of 9% above £7,755.
All employers are given a reference to identify them, it should be on a P45, P60 or payslip. The format is usually 3 numbers followed by 2 letters and then 3 – 5 numbers. Eg 034/PT4563.
Payment on Account:
Under Self Assessment some people are required to make two payments on account of tax in advance of the final payment date. Payments on Account are based on the tax for the previous tax year. They are due on 31 January in the tax year and 31 July after its end.
If you personally paid contributions to a pension of any type for your benefit, this could be a private pension or group pension which you are a member of. Do not include payments made by others (such as employers) on your behalf.
A form showing taxable pay and tax paid from the start of the tax year up to the leaving date. It is issued by the employer when a person leaves a job.
A form issued by the employer stating taxable pay and tax deducted together with the tax code operated up to the tax year end – 5th April. It also shows details of national insurance contributions paid and any student loan deductions are also shown. It should be received not long after the end of the tax year.
Self assessment tax return:
The principal instrument issued by the Tax Office to all individuals who have to report their income and pay tax. All self employed people are required to fill and file a tax return each tax year, at latest by 31 January following the end of the tax year.
Student loan repayments:
Students are commonly loaned money to assist in their studies to be repaid only once their income is above a certain level (currently £15,795). If you have a loan outstanding and your earnings are above the threshold then 9% of the remaining income is used to repay that loan.
A self employed person registered under the HMRC Construction Industry Scheme (CIS) to work for contractor or other subcontractors in most trades within the Construction Industry.
Unique Tax Reference:
All persons registered as self employed are issued with a Unique Tax Reference (UTR). The format is 10 numbers in 2 groups of 5 (eg 12345 67890). This can be found on your tax return, most correspondence from HMRC, or on CIS registration card with the 101 removed from the end.
Voucher/Payslip/Payment Deduction Certificate:
A contractor should issue a payslip or equivalent to you at least each month, this should give details of gross pay tax deducted and both your and their name plus address and tax details.