When we talk about paying income taxes, our mind always points out that it will reduce our income and we will have less money for our expenses. But on the other hand, the benefits which we can enjoy through paying income tax are ignored in many ways. We also ignore the consequences of not paying income tax as we think that they are unnecessary burdens on us.
Benefits of Paying Income Tax:
There are many benefits which are taxable, and you can not enjoy them in the UK if you do not pay income tax. The most significant interest from the state is state pension and to enjoy it you have to pay income tax on Pay as You Earn policy. Similarly, jobseeker’s allowance, carer’s allowance, employment and support allowances, widow’s pension, incapacity benefits, and bereavement allowance are the significant benefits of paying income tax. These benefits are necessary for old age people as they do not have to earn in after retirement age, but these are only beneficial for those who have paid their income taxes. Under the taxation law of the UK, it is a compulsion for you to file your tax return in the given time to enjoy mentioned benefits.
Consequences of Not Filing Tax Return:
If you do not file tax return till given date, you have to pay a penalty of £100 for first three months, and later it will increase, and you have to pay extra interests on late submission of income tax. There are too many accounting firms in the UK who provide income tax return service at very affordable charges and save your money from extra interests and penalties. The value-added tax (VAT) returning is also compulsory to inform HMRC about the additional income of your business within three months or accounting period. VAT return UK is essential for every business even it has no VAT to pay or claim.
How Income Taxes Save Money?
The benefits in the shape of allowances which are taxable, these amounts eventually pay off in old age of taxpayers. The pension allowance is the money which a person gets for his entire life without doing anything after his retirement. Similarly, other benefits are also saving money as these are extra than your tax deducted money. Personal income without paying taxes will be the only way to live your life after retirement, but in UK taxation laws are strict, and no one can avoid paying income tax. So, paying income tax on time saves the income or money spent on interests and penalties. Both income tax and VAT pay off to filer in many ways as VAT could be claimed on every single good which business purchases and if you have invested in heavy machinery or IT equipment you can request a huge amount of value added tax. Cheap accounting firms provide their services in filing both income tax and VAT returns at meager charges.
Paying taxes is a healthy habit for individuals as well as for businesses. A non-tax payer cannot enjoy those benefits from the state which a taxpayer can enjoy like allowances as mentioned above and VAT claim opportunities. Paying income tax, save you more money in the shape of VAT claims and other taxable benefits.