Income Tax

Income Tax is the main source of revenue for the government. The income tax year runs from 6 April to 5 April in any year for an individual, but may vary for a comopany. The tax is based on the earned and unearned income of a company or individual (also referred to as corporate tax).

There are a series of tax scales produced by the government annually as part of its budget process. Every individual with income of any kind is liable for income tax if the income is above the threshold ( see calculating your tax section).

A taxpayer may benefit from tax credits to decrease the legal responsibility of the revenue earned by that person. Various income tax systems exist as taxation can be progressive, proportional or regressive.

The variations between corporate and individual income tax is that individual income tax is based on the total income of that individual, whereas corporate income taxes are taken from the net income which is the differences between gross receipts, expenses and additional write-offs. When these calculations for both these taxes are formed, deductions can often be permissible on the basis of specific circumstances or identifiable criteria.

Expenses which can be reclaimed are for self-employed businessmen from the taxman include capital expenditure, this is such items which have been purchased for your business such as tools, machinery and vehicles. Another expense which can be retrieved for is revenue expenditure, which covers general day-to-day expenditures of a business
consisting of rent, heating and lighting for your premises.