Money and tax, in words your gran would use
Eleven short lessons. One idea each, a real example, and the detail hidden behind a button until you want it. No jargon, no lectures.
Lessons
11
Two minutes each
Jargon words explained
0 needed
Plain words only
Countries covered in full
3
More as we grow
The lessons
Read them in order the first time, then dip back in whenever a word trips you up.
1. Gross pay and take home pay
Gross is what you earned. Take home is what actually lands in your bank.
For example: Earn 3,000 a month, see 2,300 in the bank. The missing 700 went to tax and other deductions.
2. Tax bands are slices, not one big rate
You are never taxed at one rate on everything. Your money is sliced, and each slice has its own rate.
For example: The first slice is often tax free. The next slice is taxed at a low rate. Only the top slice pays the top rate.
3. Your top rate is the number that matters
Your top rate is the tax on your next pound or dollar. It tells you what any saving is worth.
For example: If your top rate is 40 percent, putting 1,000 into a pension keeps 400 out of the tax bill.
4. Allowance, deduction, relief, credit
Four words for the same idea, taking something off before tax is worked out, or off the bill itself.
For example: A deduction lowers the income being taxed. A credit lowers the finished bill, pound for pound.
5. Pay as you earn, or pay it later
Employees have tax taken before they see the money. Self employed people are trusted to pay it later.
For example: A self employed person earning 40,000 must keep money back for a bill that arrives months later.
6. Sales tax, VAT and GST
A tax on things you sell, collected by you, owed to the government. It was never your money.
For example: Charge 1,200 including 200 of VAT, and that 200 belongs to the tax office, not the business.
7. Why a pension is the strongest legal move
Money going into a pension usually escapes tax now, and grows without being taxed on the way.
For example: Someone at a 40 percent top rate can turn 600 of take home pay into 1,000 inside a pension.
8. Avoiding tax and evading tax
Using the rules on purpose is legal. Hiding money or income is a crime. They are not close.
For example: Claiming a relief you qualify for is planning. Leaving income off a return is evasion.
9. Compound growth, in one sentence
Money left alone earns money, and then that earning earns too. Time does the heavy lifting.
For example: Left alone at around 6 percent a year, money roughly doubles every twelve years.
10. Order of operations for spare money
There is a sensible order, and it is the same in every country.
For example: Emergency money first, expensive debt second, tax sheltered saving third, everything else last.
11. When money lands unexpectedly
An inheritance, a sale, a bonus or a payout. Do nothing for a fortnight, then check what is taxable.
For example: A gift may be tax free, while the interest it earns sitting in an account is not.
Where you are, and where we are going
Three countries now, more as we grow
Today Taxmiser covers the United Kingdom, the United States and Australia in full, with real rates and real forms. We add a new country only once its figures are checked against the official tax office, so nothing here is a guess. Canada, Ireland, New Zealand and more are next in line as we grow.
Every US state taxes you differently
In the United States there are two bills, not one. Federal tax is the same wherever you live. State tax is not. Some states take nothing, some take a flat slice, some have their own bands and their own allowances. That is why we ask which state you are in, and why two people on the same pay can keep very different amounts.
See the state by state figuresReady to see your own numbers
The lessons explain the rules. The tools apply them to you, with the real rates for your country and the actual forms you need.