What are the tax rates on earned income
- The basic rate of tax on earned income is 20%. The higher rate of tax is 40%. There is also an additonal rate of tax of 45% payable on taxable income when earnings are more than £150,000
What is the starting rate band for savings income
- There is 0% starting rate band for £5000 for savings income, but this is not available if taxable non-savings income exceeds the £5000 limit
- If the starting rate is not available, then savings income is taxed at the investors marginal tax rates after applying the personal savings allowance.
How is tax calculated
- The personal allowance is deducted from income.
- Pension contributions and gift-aid payments reduce the tax liability for higher and additonal tax payers
How is most savings income paid
- Paid in Gross
What are the personal savings allowance for all tax bands
- A personal savings allowance of £1000 is available for basic-rate payers, with a £500 allowance for higher-rate taxpayers and no benefit for addiotnal rate tax payers
How much is dividend allowance
- £2000 for all taxpayers
What non dividend savings income are paid NET/GROSS
NET:
* Interest paid by compnaies (corporate bonds)
* Authorised unit trusts e.g OEICs
Gross
* GILTS
* Dividends
* Banks and building society
What class of NI do employes under SPA age fall under
State Pension Age (SPA)
- Have to pay Class 1 NIC if their income is above the primary threshold
When is CGT payable
- CGT is payable by UK investors at the rate of 10% for basic rate tax payers and 20% for higher and additonal tax payers
What gains are taxable
- Net chargeable gains
When does IHT apply
- Only applies if the taxable of a person’s estate when they die is over £325,000 (plus a further £175,000 if a main reisdence is inherited by children and grandchildren
- IHT on death is levied at a rate of 40% on the excess above the amount of unused nil rate band
What power do spouses and civil partners have when it comes to IHT
- They can transfer their unused nil rate bands at death to the estate of the surviving spouse or civil partner
What a Potentially Exempt Transfer (PET)
- It is a lifetime gift that is free of IHT if the person who makes the gift lives for seven years after the gift is made
How does IHT relate to a person if they are domiciled
- If a person is domiciled abroad, IHT only applies to their UK assets
What residents are liable to the UK income tax
- A UK resident who is not UK domiciled may use the remittance basis of taxation
What is Stamp Duty Land Tax
- Self assessed tax on land transactions involving any estate, interest, right or power in or over land in the UK
- In Scotland this is known as LBTT and in Wales known as LTT
What is the tax relief on pension contributions
- is at the taxpayers marginal rate
How much of a tax free PCLS can be taken from a pension fund upon retirement
Pension Commencement Lump Sum (PCLS)
- 25%
When are investments exempt from tax
- When they are held within an indivdual savings account (ISA)
- UK Collective Investment Schemes are exmept from tax on gains made within the fund.
- For income funds, distriubution are taxed as savings income not dividend income.
- Disposals of shares in collective investment are subject to CGT
What policies incur no further income tax
- Any proceeds from a qualifying life assurance policy are usually free if income and CGT for the original beneficiary.
One-off regular payments from a (single premium) UK life assurance bond for a basic-rate tax payer usually incur no further income tax
