How To Ensure That Your Tax Calculations Are Right
Taxation is quite a complex topic and unless you are properly trained or your taxes
are being handled by trained personnel, you can easily end up on the wrong side of the law. On the other hand, the taxation agency will not come to you and tell you that you have overpaid your taxes. It is therefore your responsibility to make sure that you pay the right amount when it is due.
To ensure that you are on the right path, you first need to know which sources of income are taxable and which ones are not. The income that you will receive from self-employment, employment, dividends, rental income, and income from interest on savings are mainly taxable income sources. On the other hand, income from certain interest types, windfall gains, and tax exempt accounts are non-taxable sources of income. If you make the mistake of assessing yourself and then paying taxes on non-taxable income, you will end up paying more than you should.
Apart from the type of income source, you also need to look at tax relief that is offered by the government. These are figures that can ultimately bring down your liability. If you fail to make use of tax credits and tax relief, you can end up overpaying on taxes.
Leaving or Moving Into the UK
To avoid overpaying on your taxes, you also need to make sure that you keep yourself abreast with the laws that deal with moving into or out of the UK. For example, you need to pay taxes on the income that you receive if at all you have been in the UK long enough to be considered a resident. This means that you should have stayed at least 183 days in a tax year for you to be considered as a resident. You can also be considered as a resident if you stay for an average of 91 days or more for a maximum of four consecutive years. As you can see, if you stay in the UK for 182 days in a tax year and submit your returns with the aim of paying your taxes, you will be paying more than you need to.
The most important thing is that you must strive to understand the laws if you want to benefit the most. There are several reasons why the laws will change. The government might enter into new taxation treaties with other countries, withdraw from other treaties, or simply set up new rules regarding residence. It is therefore important that you consistently look at the various laws that might affect the tax situation and see how they will affect you.
If your tax situation is complex, it is always advisable to hire a tax consultant. You will be able to save a lot of money, avoid penalties, and have less hustle because everything will actually have been taken care of.
by: David de Souza
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