How does the Treasury Tax Calculator work?
If you have ever wondered how much income tax and national insurance you pay, and where it is sent to, then the Treasury’s new tax calculator should allow you to do just that.
Available from the Apple Store, Google Play and the HM Revenue and Customs website, this calculator is the first stage of a new process that will allow the government to send all taxpayers a precise statement of how much tax they pay and where it is sent by 2014-15.
By giving taxpayers this information the Treasury hopes this will help to combat the 57% of the population who know nothing about the taxes they pay and instead help strengthen support for spending cuts.
Similarly, the Treasury hopes this calculator will help to create a more transparent system.
Yet this calculator does come with its limits…
You won’t be able to use it to calculate indirect taxes such as VAT, plus some are concerned that the public will misinterpret where some of these taxes are going, such as welfare. Whilst the majority will assume this sum is going into benefits for the unemployed, in truth most of this sum will go into the state pension.
How does the calculator work?
To use this tax calculator, all taxpayers will need to do is fill in their gross pay, and it will then calculate the amount of income tax they will pay over the year, their natural insurance contributions, total tax paid and where it goes.
Could calculators like these replace chartered accountants?
Admittedly calculators such as these may encourage more people to handle their own accounts and taxes, but such calculators can only do so much.
When it comes to VAT, inheritance tax, financing a business, buying property and dealing with your self assessment, the safest way to ensure that these are efficiently handled is to employ the help of a chartered accountant.
With their support: you can ensure you never miss a deadline; they can help you to manage and reduce your tax liabilities and more importantly, they can provide you with the business and tax planning advice you crave to take your business to more profitable levels.
So whether you have got an accountant or are looking to get one, remember calculators come with their limits…
Only with the support of a clever business accountant can you feel confident that all your bases have been covered.