Liverpool

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Taxes

Information on local tax obligations, including council tax and income tax basics.

Sections

1. Tax Categories in Liverpool, UK

a. Income Tax

  • What it is: A tax on earnings from employment, self-employment, pensions, and other income sources.
  • Rates for the 2023/24 Tax Year:
    • Personal Allowance: ยฃ12,570 (tax-free income threshold).
    • Basic Rate: 20% on income between ยฃ12,571 and ยฃ50,270.
    • Higher Rate: 40% on income between ยฃ50,271 and ยฃ125,140.
    • Additional Rate: 45% on income above ยฃ125,140.
  • How it works:
    • If you are employed, your employer deducts income tax through the Pay As You Earn (PAYE) system.
    • If you are self-employed, you must file a Self Assessment tax return annually.

b. National Insurance Contributions (NICs)

  • What it is: Contributions to fund state benefits like the NHS, pensions, and unemployment benefits.
  • Rates for Employees:
    • 12% on weekly earnings between ยฃ242 and ยฃ967.
    • 2% on earnings above ยฃ967 per week.
  • Rates for Self-Employed:
    • Class 2 NICs: ยฃ3.45 per week if profits exceed ยฃ12,570 annually.
    • Class 4 NICs: 9% on profits between ยฃ12,570 and ยฃ50,270, and 2% on profits above ยฃ50,270.

c. Council Tax

  • What it is: A local tax collected by Liverpool City Council to fund local services like waste collection, schools, and public transport.
  • Rates:
    • Based on the value of your property (banded from A to H).
    • For 2023/24, Band A properties (the lowest band) pay approximately ยฃ1,368 annually, while Band H properties (the highest band) pay around ยฃ4,104.
  • Discounts/Exemptions:
    • Single-person households receive a 25% discount.
    • Students, certain disabled individuals, and low-income households may qualify for exemptions or reductions.
  • How to pay:
    • Payments can be made monthly, quarterly, or annually via direct debit, online, or at local council offices.

d. Value Added Tax (VAT)

  • What it is: A consumption tax applied to most goods and services.
  • Rates:
    • Standard Rate: 20%.
    • Reduced Rate: 5% (e.g., on energy bills).
    • Zero Rate: 0% (e.g., on most food and childrenโ€™s clothing).
  • How it works:
    • Businesses with a turnover above ยฃ85,000 must register for VAT and charge it on their goods/services.
    • Consumers pay VAT as part of the purchase price.

e. Capital Gains Tax (CGT)

  • What it is: A tax on profits from selling assets like property (excluding your primary residence) or investments.
  • Rates:
    • Basic Rate taxpayers: 10% (18% for property).
    • Higher/Additional Rate taxpayers: 20% (28% for property).
  • Exemptions:
    • Annual tax-free allowance of ยฃ6,000 (2023/24).

f. Stamp Duty Land Tax (SDLT)

  • What it is: A tax on property purchases in England.
  • Rates:
    • No tax on properties up to ยฃ250,000.
    • 5% on the portion between ยฃ250,001 and ยฃ925,000.
    • Higher rates apply for additional properties or non-residents.

g. Corporation Tax

  • What it is: A tax on company profits.
  • Rate:
    • 25% for profits above ยฃ250,000.
    • A lower rate of 19% applies to profits below ยฃ50,000, with marginal relief for profits between ยฃ50,000 and ยฃ250,000.

h. Inheritance Tax (IHT)

  • What it is: A tax on estates valued above ยฃ325,000 when someone dies.
  • Rate:
    • 40% on the value above the threshold.
  • Exemptions:
    • Transfers to a spouse or civil partner are exempt.

2. Procedures for Paying or Managing Taxes

a. Registering for Taxes

  • Employed Individuals:
    • Your employer will handle tax registration through PAYE.
  • Self-Employed Individuals:
    • Register with HMRC for Self Assessment online at gov.uk/register-for-self-assessment.
    • Deadlines:
      • Register by 5 October following the end of the tax year in which you became self-employed.
      • File your tax return by 31 January (online) or 31 October (paper).

b. Paying Taxes

  • Income Tax and NICs:
    • Automatically deducted via PAYE for employees.
    • Self-employed individuals pay via Self Assessment (online banking, direct debit, or card payment).
  • Council Tax:
    • Set up a direct debit with Liverpool City Council or pay online at liverpool.gov.uk.
  • VAT:
    • Businesses file VAT returns quarterly and pay online.
  • Other Taxes:
    • HMRC provides online payment options for CGT, SDLT, and Corporation Tax.

c. Tax Reliefs and Allowances

  • Personal Allowance: ยฃ12,570 tax-free income.
  • Marriage Allowance: Transfer up to ยฃ1,260 of unused Personal Allowance to your spouse.
  • Work-Related Expenses: Claim tax relief on uniforms, tools, and travel expenses.
  • Pension Contributions: Tax relief on contributions to private pensions.

3. Local Considerations and Resources in Liverpool

a. Liverpool City Council

  • The council is responsible for collecting Council Tax and providing local services.
  • Website: liverpool.gov.uk
  • Contact: 0151 233 3000.

b. Local Tax Support

  • Council Tax Reduction Scheme:
    • Low-income households can apply for a reduction in Council Tax.
    • Apply online via the Liverpool City Council website.
  • Citizens Advice Liverpool:
    • Offers free advice on tax issues, benefits, and financial planning.
    • Website: citizensadvice.org.uk
    • Contact: 0808 278 7840.

c. HMRC Local Services

  • HMRC does not have a physical office in Liverpool, but you can access services online or by phone.
  • Website: gov.uk/contact-hmrc
  • Self Assessment Helpline: 0300 200 3310.

d. Tax Accountants and Advisors

  • Liverpool has many local tax advisors and accountants who can assist with tax planning and compliance.
  • Look for professionals accredited by the Chartered Institute of Taxation (CIOT) or the Association of Chartered Certified Accountants (ACCA).

e. Student Tax Considerations

  • Liverpool is home to several universities, and students may qualify for tax exemptions (e.g., Council Tax).
  • Check with your universityโ€™s student support services for guidance.

4. Tips for Managing Taxes in Liverpool

  • Keep Records: Maintain receipts, invoices, and bank statements for at least 5 years.
  • Use Online Tools: HMRCโ€™s Personal Tax Account allows you to manage your taxes online.
  • Plan for Deadlines: Mark key dates for tax returns and payments to avoid penalties.
  • Seek Professional Help: If youโ€™re unsure about your tax obligations, consult a tax advisor.

By understanding the UK tax system and leveraging local resources in Liverpool, you can ensure compliance and make the most of available tax reliefs. Let me know if you need further assistance!