Income Tax Relief in the U.K.
In the U.K., a range of health, educational and prison services are paid by charging a tax on income. This system is monitored by the Government's Revenue and Customs Office, which is responsible for setting the tax thresholds, checking that all workers pay the appropriate amount of tax and giving tax relief where appropriate.
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Income Tax
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In the U.K. there is a tax on income. This is paid by employees, those who are self-employed, as well as people who are unemployed but have substantial savings. The amount of income tax paid is solely based on your level and type of income. Other factors, such as age, are not considered.
Income Tax Relief
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For a U.K. taxpayer, certain expenditures are not considered taxable and do not count toward total income. When these are deducted, the level of income is reduced, which automatically lowers the amount of income tax to be paid. Claiming back this non-taxable income is known as tax relief. Tax relief can be backdated for six years after the initial expenditures.
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Examples of Income Tax Relief
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Pension Payments: if you pay money into a Revenue and Customs-approved pension scheme, then you can get tax relief on your pension payments. This includes company, personal or stakeholder pensions. The tax relief is often paid as a tax-free lump sum when you retire.
Rental Income: under the "rent a room" scheme, if you let furnished rooms in your house, part of the letting income is not taxed. This applies regardless of whether you own or rent the property.
Life Insurance: if you took a life insurance policy out before March 13, 1984, you can get tax relief on the income from the policy.
Other Types of Tax Relief
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If you are self-employed and your business has lost money in a given year, you can get tax relief for it by setting your loss against other income for the same year or gains from previous or future years. You can also claim tax relief on your business expenditures. However, the expenditures must be "wholly and exclusively" for business purposes.
Claiming Tax Relief
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Most tax relief is paid automatically at the end of each tax year. If you do not think that you have received the right amount of tax relief, you must write to your tax office.
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References
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