Personal tax is another phrase for income tax and self assessment.
We use these to describe tax or income taxes incurred by everyone in the UK, and generally throughout the world.
It’s an tax on individuals paid to the government.
It’s typically assessed on personal income.
You can have a director and shareholder of a company or sole trader paying pincome tax on their dividends, wages and interest earned and employees paying tax on their gross earnings/wages that they earn.
For employees personal income tax is calculated through something called PAYE (pay as you earn).
For shareholders and directors of companies, partners in partnerships and sole traders income tax is calculated through self-assessment.
Self-assessment is a method of declaring your income so the personal income tax can be calculated and paid to the government.
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Self-assessment is also used to declare and calculate capital gains tax on the sale of property, shares and other assets.
So PAYE (pay as you earn) is income tax and self assessment is personal income tax.
Below is an example of where we have helped a client with tax.
Recently a client went from self employed sole trader to being employed. This is the first year that they were employed. They gave me their P60 which is an annual summary of the income earned and PAYE suffered by them under the employment.
The client hadn’t realized they could claim a mileage allowance for the miles that they did as an employee to perform the functions of the job, that were not reimbursed to them by the employer to the full extent.
So we claimed the mileage allowance for this client and they got a tax refund cheque of approximate £2,890 relating to the mileage claim.
That’s an example of where we helped an employed person who had no idea they were due a refund.
Self Employed Tax
With self employed individuals it’s very easy to track their income through their bank statements and their sales invoices.
But what is easy to miss and how we can help, is to claim all the costs that are appropriate for earning the income.
The general rule in taxation is if you have to spend the money to earn the money, then it’s tax deductible.
And quite often people don’t have offices and use their own private vehicle for business so they can claim home office expenses and mileage expenses.