UK Tax Year

The new UK tax year starts today. It always starts on April 6th each year and runs to April 5th the following year. I must admit...I much prefer the British way of paying income tax, called 'Pay As You Earn' or PAYE. As in America, your employer simply withholds taxes from your earnings. Deductions are based on your own personal tax allowances and exemptions. However, unlike US taxes, you do NOT have the freedom of withholding more or less than you're entitled to. Consequently, at the end of the tax year, you are not faced with a huge refund or payment. In fact, you do not even have to file a tax return! You simply receive a P60 form (like a W-2 form) from your employer which shows how much you earned and how much tax you paid. You only need to file a return if you're self employed or have a complicated tax situation. If your job or circumstances change, you simply report that back to the Inland Revenue so that your PAYE deductions can be amended. The tax you pay year-round is a true reflection of what you owe. Period. And for anyone who has ever had to file a US tax return, you will quickly appreciate the benefits of the UK system!