Excite

How to use an income tax calculator

When it’s time to make your income tax declarations, you always wonder if there is something more to pay. Depending on your situation at work, taxes might be deducted already from source. But if you are an independent contractor or a freelancer, you might want to make sure you put away each month an amount to pay for taxes. We take a look how a free income tax calculator can check if we are over or under paying taxes.

How to make use of it

Using an income tax calculator helps in determining whether you have paid too much or too little. Enter the required data such as age, allowances and deductions, pension contributions, childcare vouchers and gross wage to get an estimate of the taxes you are going to pay. Students who have availed of private loans can expect to repay their loans as a function of their annual income. For this year, it is set at £15000. Hence, when a student receives income beyond the ceiling, he/she must begin to pay taxes.

  • Age

There are 3 main categories of age where personal deduction allowances are applied:

* Below 65 - £9440

* 65-74 - £10500

* 75+ - £10660

  • Civil status

In addition, if you are married you are allowed up to £7915, if born before 06 April 1935. In addition, maintenance payments relief is available to those paying under a court order provided the other party has not remarried and children are below 21 years of age.

  • Blind persons

Blind persons also have deductions of £2,160.

  • Childminding

Childcare vouchers are also included in the calculation of your personal income allowances.

  • Pension funds

The amount of contributions you pay to your pension fund is also a part your income tax declaration.

  • Charity contributions

Gifts to charity are also part of tax relief as well as cash or assets donations.

  • Self-employed tax relief

Independent contractors can get a tax deduction on renting business premises, advertising, legal and professional fees, and office operating and maintenance costs.

  • Threshold limits

Taking into account the above factors, income tax bands for 2013 are, as follows:

* Basic rate (0%) - £0 to £34,370 * Higher rate (40%) - £34,371 to £150,000 * Additional rate (50%) - £150,001+

Using online tools

To get a clear picture of your tax finances, use an income tax calculator. There are several websites on the internet where you can avail of this service to get an idea how your finances look like. Examples of these sites include listentothetaxman.com, incometaxcalculator.org, and the salarycalculator.co.uk. Alternatively, use the income tax checker of the HMRC to see if you’re paying the correct amount or are due a refund.

United Kingdom - Excite Network Copyright ©1995 - 2017