Tax Calculator
Calculating tax can sometimes be complicated and an expensive process if the calculation is wrong. If tax is calculated wrong it could mean paying too much or too little tax. If too little tax is paid there can be subsequent fines and even imprisonment for serious offences.
There are many variables that can come into consideration and there are many different types of tax that need to be calculated, added to the complexity of taxation.
There are many websites that offer tax calculators but it is vital for the person making the calculations to know all the details first. Inputting the incorrect information may calculate the tax wrongly.
There are a number of different types of taxes, all of which have different tax rates and conditions.
VAT
At the moment Value Added Tax (VAT) is calculated at a rate of 20%. This does mean it’s quite easy to work out the VAT on an item even though it is the case that VAT had increased. Before the VAT rise the calculation was more difficult at a rate of 17.5%.
Car Tax
There are also different calculation to make for the type of car tax that is payable. The first variable is to do with when the car is registered. If the car is registered before the 1 March 2001 the car tax is calculated depending on the size of the engine. Whereas cars that are registered after the 1 March 2001 are taxed on the amount of CO2 emissions the car has.
Income Tax
Income tax is worked out on the amount a person earns, whether through wages, investments or other means. For any one that earns less than £7475, they will not be subjected to income tax. Any earnings that are over this amount will be taxed at different rates depending on the amount earned in a year.
National Insurance
National Insurance is another wage related tax. It is normal for people who receive a wage to be tax National Insure on a Pay as you earn basis (PAYE). The amount of National Insurance can depend on the amount. If someone is earning £150 a week the National Insurance will be about 12% of that amount.
Council Tax
Council tax is usually calculated by the area and the value of a property. This means that almost all councils will have different amounts of council tax that is charged. Each property will be in a council band and it’s this band that dictates the amount of council tax. The council band is usually calculated by the value of the property.
Corporation Tax
Most businesses in the UK will have to pay corporation tax on the profits that are made. This is an area of law where specialised tax solicitors and accountants are used to help work out what tax needs to be paid and ways of reducing any tax bills.