Paying tax is a way of life: we are taxed on our earnings, investment and savings and even our assets when we die.
Tax is complex, but the more you know, the easier it is to manage your money and reduce your tax bill. Below you'll discover what taxes affect which aspects of your finances from tax-free savings and investments to pension plans with tax-saving benefits and what your allowances are.
Nearly everyone is entitled to a personal allowance, which allows you a certain amount of income tax free.
Your personal allowance will vary depending on your level of income, your age and personal circumstances, such as whether you're married or have any disabilities. For 2014-2015 the standard personal allowance for anyone born after 5 April 1948 is £10,000. For those born after 5 April 1938, but before 6 April 1948 this is £10,500. For those born before 6 April 1938 it is £10,660.
Your income level can reduce the personal allowance available to you. For example, someone with income above £120,000 may have no personal allowance at all.
You can find more information on allowances on the HM Revenue and Customs website.
Any interest you make on your savings is normally taxed at 20%. Higher earners can pay up to 40% or 45%.
In fact, tax on savings income works in a similar way to salaries. The more you earn, the more you pay, and the more you earn on your savings, the more you pay too.
Your savings income is added to any other income you get, any personal allowance you are entitled to is deducted and you're taxed on the remainder on a rising scale. As mentioned above your personal allowance depends on factors such as your age and income levels.
So, the more you earn on your savings, the more you owe to HM Revenue and Customs (HMRC). The good news is that there's a wide range of savings options to offset your tax liability, including ISAs and pensions.
HMRC gets a cut of what you get from 'UK dividends' investment income from UK company shares, unit trusts or open-ended investment companies.
Your dividend income is also added to any other income you get.
And you face a rising scale of payments: the more successful your investments, the more tax you pay.
Dividend income up to the £31,865 basic-rate tax limit is taxed at 10%. Anything you make up to £150,000 is taxed at 32.5%. If your return is higher than £150,000, you pay 37.5% tax on it. You could also be liable for Capital Gains Tax when you sell your shares.
Non-taxpayers can't reclaim the 10% dividend tax credit.
Offshore bonds and Venture Capital Trusts also offer attractive tax incentives.
What you leave behind is known as your 'estate'. This is liable to Inheritance Tax (IHT) if it's worth more than £325,000.
Tax is paid on the amount over the £325,000 IHT threshold called the nil-rate band (NRB) and at a rate of 40%.
Your estate will typically include your home, personal possessions, what's in your bank account, investments and your car.
Here are some things you can do to reduce what is paid out on Inheritance tax from your estate:
Important legal and regulator information
Laws and tax rules may change in the future. The information here is based on our understanding in April 2014. Your personal circumstances also have an impact on tax treatment.
As with any investment the value can go up or down and may be worth less than what was paid in. All figures relate to the 2014-2015 tax year,unless otherwise stated.