Photo Credit: 401(K) 2013 via Compfight cc
A large proportion of your income may go towards paying taxes and typically it is estimated that around 35% of the money we earn goes on tax.
- Direct taxes such as income tax and National Insurance account for 20% of the money we earn.
- Indirect Taxes such as VAT, duty on alcohol and petrol and council tax account for the rest.
Some of the main taxes that you might pay are:
- Income tax is paid on earnings, pensions, benefits, savings and investment income and rents.
- National insurance is paid on your income from working or business profits.
- Capital gains tax is paid on the profit you make on any possessions or investments you sell, or the increase in value from the date you acquired the assets if you give them away, unless these are exempt.
- Stamp Duty Land Tax on property and Stamp Duty on shares
- VAT is currently paid at a standard rate of 20% on most goods and services, with some exceptions (there is no VAT on books, children’s clothes and food. Fuel and power are taxed at 5%).
- Indirect Taxes & Excise Duties are paid on insurance premiums, tobacco, alcohol, petrol and air travel, at different rates for different categories (unleaded petrol has a lower rate than standard diesel, for example).
- Inheritance tax applies on some lifetime gifts and also to estates on death.
For help in understanding how these taxes apply to you, please give us a call or to keep up to date with our daily blogs through the Edward Hands & Lewis mobile app, just search Edward Hands on the iPhone or Android store to download our app for free.
Leanne is a Chartered Tax Adviser, specializing in advising on UK tax matters but also including overseas tax as needed. Leanne is head of Taxation Services at EHL Solicitors in Leicester.
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The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.