• Posted 8th October 2015

What are the Common Terms Used in Tax Information?

Do not know what every frequent term used in tax information means? Well, you need not worry as we have got all the information just for you. HMRC (HM Revenue & Customs) HMRC is the most commonly used term in the tax information. It is a government department that is in charge of assessing and collecting different types of tax from the businesses and individuals. It is also in charge paying different types of tax reliefs. Income tax This type of tax is charged on income. It must be paid on income from employment, pension income, social security income, self-employment income, income from property, income from savings and investments, and miscellaneous income. Tax code A tax code is made up of letter and numbers and is shown in the payslips. This code is provided by the HMRC to the employer which shows how much tax free income employees should get each time they get paid. Capital Gains Tax (CGT) It is a tax levied on the profit made from selling the property or shares. Inheritance tax (IHT) It is a tax paid on the person’s estate after death. It is also charged on some gifts made during a person’s lifetime. VAT VAT, also known as Value Added Tax is a tax charged for the goods and services. PAYE PAYE stands for Pay As You Earn. It is a system for collecting both the income tax and national insurance (NI) from employment. Self-assessment Self-assessment is a system used by HMRC to collect tax, which is automatically deducted from your wages or pensions. Tax refund It is return of payments from HMRC for paying too much tax in any particular year. Tax year It is a an accounting period, which starts on 6 April in one year and ends on 5 April the next calendar year. Tax return A tax return is a form that you may need to complete, depending on the type and amount of your income which is used by tax authorities to assess tax liability. Taxable income It is a part of an income where you have to pay income tax on. Non-taxable income It is an income where taxes are not paid on.