Tax income is one of the most difficult affairs to deal with, and the ever-changing tax laws, tax exemption, tax deduction, tax refund, tax rebate etc., have made it even more difficult for many people to understand. As full-time employees, we do not even realize how much tax we already are paying and how much extra tax we have paid. Such complications make it hard to know how we can save some money or claim our tax back. In this guide, we will show the step by step procedure of how tax rebates can be calculated so next time, and you will be able to calculate your tax rebate and claim your money.
What is a tax rebate?
A tax rebate is money you can claim back from the HMRC by yourself or with the help of a professional tax rebate service provider. This money is the tax amount, and you can only claim it back if you think you have paid too much tax. Tax rebate is the concept introduced by the government, which is the final reduction in the amount of actual tax that you pay. Teacher tax rebate calculators or other online calculators allow you to calculate this amount before claiming. It is more like a bargain you can do for the last time. You can claim this amount from HMRC from your taxable income after claiming deductions and exemptions.
Steps for calculating a tax rebate
Here are the steps to calculate a tax rebate before claiming it.
Calculate your income
It is the first step where an individual is required to calculate the year’s gross income. This amount will include all the components and allowances of salary, such as house rent, mobile reimbursements and other special allowances. After that, you need to add the income you have received throughout the year from other sources, such as capital gains and interests. The total amount will be the annual gross income.
Subtract the deductions
The tax deduction is the process that allows you to reduce your payable tax further. It includes the savings, investments and spending you did on certain things. The standard deduction under section 80C shows that you can claim up to 50,000.
Calculate your taxable income
After subtracting the deductions, you are eligible. You will arrive at the total amount that will be your taxable income. If the calculations show that you have already paid more than the actual required amount, you can claim the extra amount back by filing your case to HMRC. This tax incentive is also provided by the government to individuals in case they earn less income. After calculating your taxable amount, if you find that the tax you have paid is more than the amount you have earned, you will be eligible for the tax rebate. You can also claim the money you have spent on donations and charity.
Income tax is a complicated process where most of us don’t even realize how much tax we have paid and what is the actual requirement. However, the good thing is that you can claim the extra money after a year by calculating the tax you have paid. If you have paid too much and this amount is more than what you have earned, you can claim the extra money back. The tax rebate amount is obtained by calculating your gross income, the tax you have paid and the other expenses you did on business. Online tax rebate calculators are the other efficient way you can use to know this amount.