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Hello,
Questions: income tax computation
1. Does the tax deducted at source by the employer only relate to employment income?
2. Does it take all the tax chargeable to that specific employees employment income (i.e his salary) or is it just some portion of the tax chargeable on the employees’ income and the rest is still a tax liability?
3. Is tax payable = tax liability – tax deduced from PAYE system by employer, because there are other incomes (namely saving income and dividends), and not just non-saving interest income that will have tax deduction with their respective different rates? so there is still a tax liability that must be charged for those other incomes so its tax liability – tax deducted from PAYE?
4. then if there’s no employment income, will tax liability = tax payable?
Thank you very much.
Looking forward to hearing from you,5. Is it compulsory for the employer to use PAYE system to deduct employment income tax ? i.e do all employers do it?
1. yes
2. tax deducted on the total amounts paid
3. tax payable is the tax liability less the PAYE deducted at source
4. if there is no PAYE then tax liability and tax payable are the same
5. yesIf all the tax for employee’s salary is deducted at source via PAYE, why is there tax liability left to pay?
Does it come from the other incomes tax charges?
Employment income is only one source of taxable income.
Yes it should though there may be a difference due to what assessable benefits a taxpayer has.Could you clarify sentence 2 please? how could the difference occur due to these assessable benefits? how are the employers aware of something that the HMRC are not or is it the other way around?
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