Personal/ Income tax 

Personal/ Income tax is the amount of tax that you pay on your earnings above your tax free allowance known as personal Allowance. This will rise from £7,475  2011/12 to £8,105 for 2012/13 for those aged 65 and below. For individuals aged between 65 – 74 this is capped at £9,940 for 2011/12 and £ 10,500 for 2012/13 while for those aged 75 and over it is £10,090 for 2011/12 and £10.660 for 2012/13. The Personal Allowance is reduced where the income is above £100, 000 – by £1 for every £2 of income above the £100,000 limit irrespective of age.

Taxable earnings include earnings from employment or self employment, shares, pensions, rental properties, savings and income from a trust. If you are employed you will probably be paying tax under Pay As You Earn (PAYE) scheme through your employer who will directly deduct the tax from your pay and hands it over to HMRC.

How it may affect you

• You may be self employed, a trustee or a company director in which case you will need to complete a self-assessment tax return
• You may require advice on how to minimize the total tax you pay
• You may require specialist advice regarding investments to reduce your tax bill