Learning Material Sample
Investment and risk10.1 Taxation - income taxIn this section, we summarise the main rules relating to taxation of income. ...
Shortened demo course. See details at foot of page. ... Individuals who are UK resident and domiciled for tax purposes are liable to income tax on all their income, wherever it arises in the world. The scope of this module only allows us to concentrate on UK resident and domiciled individuals. The available personal allowances are:
Personal allowance (basic) Personal allowances (age related) Blind persons allowance Married/civil partners allowance. You can see the current rates in the Tax Tables. All UK residents, including children, are entitled to the annual personal allowance. This is an amount of income that can be received without having to pay any Income Tax on it. Certain categories of non-UK residents can also claim the allowances against income that is taxable in the UK. These include; citizens of the Republic of Ireland, employees of the Crown, residents of the Channel Isles and Isle of Man, previous residents now living abroad for health re... Shortened demo course. See details at foot of page. ...on the amounts they receive. For those payments still qualifying for tax relief, the payments must be made under an enforceable order – Court or Child Support Agency. This relief is also given as a tax reducer, being deducted after the individuals’ income tax liability has been calculated. Where the relief is available it is given at 10% on payments up to £3,140 a year (2014/15).Having now identified the sources and amounts of different types of income, deducted any allowable expenses, added the amounts together to identify total income, deducted any available tax reliefs and personal allowances, we have arrived at the amount of income liable for Income Tax. Firstly we will recap the steps in the process we have covered so far:
1. Identify the sources and amounts of income Income is taxed in the following order: Earnings, pensions, rental income and all sources not classed as savings or dividend Deposit and other savings income – this is important if non-savings income is below the 10% rate threshold Dividend income Chargeable gains from life assurance policies 2. Deduct any allowable... Shortened demo course. See details at foot of page. ...cted at source from savings and investments or through PAYE is set against the calculated tax liability. If there is a balance to be paid, the individual taxpayer is responsible for paying this to HMRC under self-assessment or by an adjustment to a later year’s PAYE code. If the tax already deducted is more than the calculated liability, the excess will be repaid. It is important however to note that dividend tax credits cannot be repaid.
One should not get involved with illegally evadi...
Shortened demo course. See details at foot of page. ...de tax reliefs e.g. registered pension plans. |
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