All you need to know -Tax Jargon

The world of UK taxation can often seem like a labyrinth of confusing terms and acronyms, leaving many individuals and businesses bewildered. In this comprehensive glossary, we aim to decode the complex jargon associated with UK tax, providing you with a clear understanding of the terminology that shapes the country's tax landscape. Let's unravel the mysteries and empower you with the knowledge needed to navigate the intricacies of the UK tax system.

Income Tax: Income Tax is the tax levied on an individual's earnings, including salary, pensions, and income from investments. It is calculated based on various income bands, with rates that may differ for different sources of income.

National Insurance Contributions (NICs): NICs are payments made by employees and employers to fund state benefits, including the state pension and healthcare. Understanding the different classes of NICs is crucial for both employees and businesses.

Value Added Tax (VAT): VAT is a consumption tax added to the price of goods and services. It is collected at each stage of the production and distribution chain, with businesses acting as intermediaries in the process.

Corporation Tax: This is a tax on the profits of limited companies and some other organizations. Businesses need to calculate their taxable profits accurately to determine their Corporation Tax liability.

Self-Assessment: Self-Assessment is the system used by HM Revenue and Customs (HMRC) to collect Income Tax. Individuals, including self-employed individuals and business owners, must report their income and expenses through a Self-Assessment tax return.

Capital Gains Tax: Capital Gains Tax is a tax on the profit made when an asset is sold or disposed of. Understanding the exemptions and reliefs available is essential for individuals and businesses engaged in the sale of assets.

Inheritance Tax: Inheritance Tax is levied on the estate of a deceased person. Individuals must plan their estates strategically to minimize the impact of the Inheritance Tax on their heirs.

By demystifying the UK tax jargon through this comprehensive glossary, we hope to empower individuals and businesses to navigate the tax landscape with confidence.

If you have any questions please do not hesitate to call me on 01442 828006 or email me at jreeves@taxmatters.tax