There are certain types of income that do not attract tax. They are benefits, income from tax exempt accounts and special pensions. Residents of UK are eligible for tax free allowance called personal allowance, which is an amount of taxable income which the resident is allowed to earn each year. This allowance is free of tax. For the year 2008-2009, the tax free amount is fixed at '5,435. If the individual is over the age of sixty five, this amount is likely to increase. A registered blind person can claim tax free blind person's allowance. Income tax is applicable on taxable income after the tax free allowances. Certain deductible reliefs and allowance will reduce the tax bill of an individual. Some of the deductible allowances are married couple allowance, maintenance payment relief, and tax relief on pension, donations to charity based on gift aid or payroll giving. There are some other amounts which can be reduced from the tax bill. They are allowance that decrease tax in retirement, tax advantages of personal pension and offers to charity (Income Tax, n.d).
The revenue raising methods of the UK government has come to debate with the abolition of 10 percent tax. The 10 percent tax was abolished to simplify the tax system. ...Show more