We all hate paying taxes, but we have to do it. It’s one of the main ways governments have obtained funds for public spending and essential services. The tax revenue that’s generated goes towards things such as road maintenance, parks, street lights, national defense, etc.
We pay tax on our income. We pay tax on things we buy from the grocery store, we pay travel tax, and just about everything we ever buy.
Knowing this, there are understandably a lot of questions that go through our heads. Luckily, tax experts at income-tax.co.uk have analyzed data to find the ten most searched tax queries in the UK, and in this article, we’ll be answering them for you.
Let’s jump right in.
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Top 10 most searched for tax queries in the UK
The most searched tax query in the UK is How much tax will I pay?, followed closely by How much is my Car Tax? and What Council Tax band am I?
There are seven more questions in this list: What is Capital Gains Tax? and How much is Inheritance Tax?. Let’s explore all the answers to the most asked tax queries in the UK.
How much tax will I pay?
There are various taxes you’ll have to pay over your lifetime. But, although the exact tax this question is referring to is unclear, the one that comes to mind straight away is Income Tax, which is what we’ll answer.
The amount of Income Tax you pay will depend on how much you earn – the more you make, the more you’ll pay. The Personal Allowance for the current tax year (2022/23) is £12,570. This means that you will only pay Income Tax on income above that threshold. Let’s look at all the income bands in England.
|Tax Band||Taxable income||Tax rate|
|Personal Allowance||Up to £12,570||0%|
|Basic Rate||£12,571 to £50,270||20%|
|Higher Rate||£50,271 to £150,000||40%|
|Additional Rate||over £150,000||45%|
For instance, suppose your annual salary is £25,000. You will only pay tax on £12,430 (25,000-12,570) at 20%. This means your total Income Tax bill for the fiscal year will be £2,486.
If you are an employee, these tax deductions will be made automatically, and you will see the Income Tax and National Insurance deductions on your payslip. If you are self-employed, you will have to complete a Self Assessment tax return to declare how much is owed to HM Revenue & Customs (HMRC).
How much is my Car Tax?
Your Car Tax is paid every year, but the amount you pay will vary each year. When you first register your car, your Car Tax bill is dependent on the car’s CO2 emissions:
|CO2 emissions||Petrol Cars & Diesel cars that meet the RDE2 standard||All other diesel cars||Alternative fuel cars|
|1 to 50g/km||£10||£25||£0|
|51 to 75g/km||£25||£120||£15|
|76 to 90g/km||£120||£150||£110|
|91 to 100g/km||£150||£170||£140|
|101 to 110g/km||£170||£190||£160|
|111 to 130g/km||£190||£230||£180|
|131 to 150g/km||£230||£585||£220|
|151 to 170g/km||£585||£945||£575|
|171 to 190g/km||£945||£1,420||£935|
|191 to 225g/km||£1,420||£2,015||£1,410|
|226 to 255g/km||£2,015||£2,365||£2,005|
After this first year, the amount of Car Tax you pay will depend on the type of fuel it uses. Also, whether you decide to pay for an entire year or six months will impact your Car Tax bill. The rates are as follows:
|Fuel type||Single 12-month payment||Single 12-month payment by Direct Debit||12 monthly payments by Direct Debit||Single 6-month payment||Single 6-month payment by Direct Debit|
|Petrol or diesel||£165||£165||£173.25||£90.75||£86.63|
What Council Tax band am I?
Council Tax is a huge tax bill homeowners have to pay. If your home is in England or Scotland, it will be put into a band between A and H – A is the cheapest, and H is the most expensive. In Wales, your home will be put into a band between A and I, with A being the cheapest and I the most expensive.
To find out what Tax bill your home is in, the UK government has a Council Tax Band checker on their website. All you have to do is enter your address and postcode, and it will give you the Council Tax bands of each home in that postcode.
How much can you earn before paying tax?
The tax-free Personal Allowance for the 2022/23 tax year is £12,570. This means earnings up to that threshold are exempt from Income Tax. However, if you earn more than £125,140, you will have to pay Income Tax on all of your income – the Personal Allowance will be charged at the basic 20% rate.
What is Corporation Tax?
Corporation Tax is a tax on UK businesses. Much like Income Tax for individuals, Corporation Tax is charged on the annual profits of a business. Corporation Tax is set at 19% for the current tax year, but this will rise drastically to 25% for the next tax year.
Businesses that have to pay Corporation Tax include the following:
- Limited companies
- Foreign companies with offices or branches in the UK
- Clubs and co-operatives
- Unincorporated associations – e.g., community groups or sports clubs
List of tax codes and what they mean
Tax codes are given to every employee, and it denotes the amount of income you can earn before you have to start paying Income Tax. You can find it on your payslip, P45, or P60 forms.
A tax code consists of four numbers and a letter – the numbers denote how much you can earn tax-free, and the letter indicates if any changes have been made to your Personal Allowance.
The most common tax code is 1257L. This means that you are entitled to the standard tax-free Personal Allowance of £12,570.
How much is Inheritance Tax?
Inheritance Tax is currently set at 40%. The Inheritance Tax threshold for the current tax year is £325,000. This means that a 40% Inheritance Tax will have to be paid on an estate value that exceeds the threshold.
How much is Road Tax?
The term Road Tax is used interchangeably with Car Tax. Therefore, see the second question in this list, “How much is my Car Tax,” to determine what your Road Tax will be.
What is Capital Gains Tax?
Capital Gains Tax is a tax paid on profits you make from disposing of an asset that had increased value from when you first acquired it. Disposing of an asset includes:
- Selling it
- Transferring or gifting the asset to someone else
- Swapping the asset for something else
- Receiving compensation for it
Besides your car, Capital Gains Tax is paid on all of your possessions worth £6,000 or more and also applies to a property that isn’t your primary residence, stocks and shares, and business assets.
The current Capital Gains Tax rate is 18% for basic rate taxpayers and 28% for higher rate taxpayers. However, it should be noted that you get a Capital Gains Allowance of £12,300 (£24,600 for a married or civil partnership couple).
What is Working Tax Credit?
Working Tax Credit is money provided by the Government to help families who are on low incomes. You can apply for Working Tax Credit if you are in employment, self-employed, or on leave such as maternity leave or paid sick leave.
To apply for Working Tax Credit, you need to be working a set number of hours per week:
|Circumstance||Hours per week|
|Age 25 to 59||30 hours or more|
|Age 60 or over||16 hours or more|
|Disabled||At least 16 hours or more|
|Single with 1 or more children||16 hours or more|
|Couple with 1 or more children||Typically, at least 24 hours between you (with 1 of you working at least 16 hours)|
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