TAX ADVICE
by Applegate Accountants, Cheshire

When the words ‘tax advice’ are mentioned most people probably think of income tax. Income tax is only one of the forms of taxation that is used to collect money for use by the UK government, but it does impact on a large proportion of the UK population.

Income tax and capital gains tax are both administered by the new government department formed by the amalgamation of the Inland Revenue and HM Customs & Excise. HM Revenue & Customs contains the following three parts:

Some sources of tax advice are the Taxpayer service offices, the main offices that the taxpayer deals with, and these handle much of the basic income tax assessment and collection functions.

Taxpayer district offices deal with more complex income tax advice issues.
Tax enquiry centres deal with enquiries and provide forms and leaflets to taxpayers.
However, you may find a call to our office, for free tax advice a more user friendly service!

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The law governing tax

The authority to impose taxes comes from two sources. The first is legislation passed by parliament known as ‘statue law’. You may have heard of the ‘Finance Acts.’ These are generally published each year and give details of any changes to taxes. These changes will have been proposed by the Chancellor of the Exchequer (usually in the budget) and passed by Parliament.

There are also other statue laws that were designed to create framework for the way that certain taxes work that continue to be relevant.

The second source of tax law is called ‘case law’ and arises from decisions taken in court cases. Taxation can be very complicated and sometimes disagreements between HMRC and taxpayers result in court cases. The final outcome of such cases can then become ‘case law’ and influence future interpretation of statue law.

Information available from HMRC

In addition to the tax law outlined above, there are interpretations and explanations of various issues that are published by HMRC. The main ones are as follows:-

Extra-statutory concessions are issued by HMRC when the agree to impose a less strict interpretation of the law than would otherwise apply in particular circumstances.

HMRC statements of practice are public announcements of how the HMRC interpret specific rules.Guides and help sheets are issued to help taxpayers complete to necessary return forms and calculate their tax. A large array of publications and forms can be downloaded from the HMRC website. It also provides data on rates and allowances for a range of tax years.

How Income Tax is divided up for tax purposes

Tax Advice, by Applegate Accountants Cheshire The income that an individual generates is divided into categories, depending on what sort of income it is and where it comes from. These categories were previously called ‘schedules’. The categories are now simply named after the type of income that they include. This is done so that:

The correct rules on how to work out the income are used (since these vary with the categories), and
The correct rates of tax are used (since they can also depend on the type of income).

The main categories of income

Property Income Rental Income from land & Property

Trading income Profits of trades and professions (the self
Employed and those in partnership)

Savings & Investment UK interest & UK dividends
Income

Employment, pension and Income from employment etc. Income Tax is
Social Security Income deducted from employment income under the
System known as Pay-As-You-Earn (PAYE)

For Income tax purposes time is divided into tax years.
Individual’s income and income tax is worked out separately for each tax year.

The tax year runs from the 6th April in one calendar year to 5th April in the next calendar year.

TAX ADVICE by Applegate Accountants, Cheshire

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TAX ADVICE
by Applegate Accountants, Cheshire