Docstoc

Corporation Tax

Document Sample
Corporation Tax Powered By Docstoc
					Personal Tax
Andrew Harrington

   April 2007

     www.TeachMeNow.net
                 Personal Tax
Key questions:

      What is income tax and do I have to pay it?

          How much of my income is taxable?

            How much tax do I have to pay?

    When should I pay the tax and submit my return?

                    What if I don’t?

                      www.TeachMeNow.net
                 Personal Tax
What is income tax and do I have to pay it?

      Income tax is a direct tax on a taxpayer’s
           aggregate income for a tax year

   The tax year runs from 6 April – 5 April
   Individuals resident in the UK are liable to
    income tax on all income, wherever it arises
   Some forms of income are exempt
   Different forms of income are taxed in different
    ways

                      www.TeachMeNow.net
                 Personal Tax
How much of my income is taxable?

   All income is taxable unless specifically
    exempted
   All UK residents get a personal allowance – a
    chunk of income which may be received tax free
   A blind person’s allowance is available to
    registered blind persons
   The married couple’s allowance is available if at
    least one spouse was born before 6 April 1935
    (but relief is only available at 10%)

                      www.TeachMeNow.net
                       Personal Tax
How much tax do I have to pay?

   Before the tax liability is calculated, income must be classified as
    non-savings, savings and dividends
   Allowances are allocated to income in this order, as are the tax
    bands

                          NS                  S             D

    First £2,150          10%                 10%           10%
    Next £31,150          22%                 20%           10%
    Above £33,300         40%                 40%           32.5%

   Income must be grossed up if tax has been deducted at source


                               www.TeachMeNow.net
                 Personal Tax
Example…
                  Total                     NS       S          D

Employment Inc    17,000              17,000
Trading profit    20,400              20,400
B/Soc interest      1,200                          1,200
Dividends           2,400                                     2,400
                  ----------------------------------------------------
STI               41,000              37,400 1,200             2,400
PA                (5,035)             (5,035)
                  ----------------------------------------------------
Taxable           35,965              32,365 1,200             2,400
                  ----------------------------------------------------

                       www.TeachMeNow.net
                     Personal Tax
Taxable                   35,965                32,365        1,200         2,400
                          ---------------------------------------------------------

Starting rate
          NS    £2,150               @          10%                     215.00
Basic rate
          NS    £30,215              @          22%                   6,647.30
          S     £935                 @          20%                    187.00
Higher rate
          S     £265                 @          40%                      106.00
          D     £2,400               @          32.5%                    780.00
                                                                      -----------
Tax liability                                                         7,935.30
                                                                      -----------


                                www.TeachMeNow.net
                   Personal Tax
When should I pay the tax and submit my return?

   Income tax NOT deducted at source is payable via two
    payments on account (31 January in the tax year and 31
    July following the end of the tax year)
    and a balancing payment or repayment (31 January
    following the end of the tax year
   Payments on account are each 50% of the
    corresponding liability from the previous year
   Information is submitted to HMRC via a tax return
   Tax return must be submitted by 30 September for
    taxpayers who wish HMRC to calculate their liability
    (31 January for those who calculate their own liability)

                         www.TeachMeNow.net
                      Personal Tax
What if I don’t?

   Tax paid late may lead to interest and surcharges
   Interest runs from the due date of payment, at 7.5% pa on a daily
    basis
   If a balancing payment is more than 28 days late, a surcharge of
    5% arises
    (a further 5% after 6 months)
   Failure to notify chargeability to tax within 6 months after the end
    of the tax year could give rise to a penalty based on the unpaid tax
   Late submission of a tax return results in a £100 fixed penalty
    (further £100 if > 6 months late)
    (possibly 100% of tax for the year if > 12 months)
    (possibly £60 per day)



                              www.TeachMeNow.net

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:38
posted:4/8/2010
language:English
pages:9