Week 2

• What HMRC stands for?

  . His Majesty Revenue and Customs
• If somebody is employed can he/she also be self-employed?

  Yes
• Tax year in the UK runs?

  April 6th-April 5th
• § Employment income - it is your salary/wages
• § Trading income from self- employment – you must be registered as self-employed
• Interest/savings income – if you are receiving interest from your savings, but not an ISA (individual Savings Account
• § Dividend income - if you are a Director in a limited company or invested in the Stock Exchange and receiving dividends
• § Property income – if you rent out a house or flat
• § Most UK residents pay tax at source through their employment under a contract of employment
• Most income is received gross whilst some incomes are received net
• § Property income, trading income are usually received gross
• P60

  § Summary of: income received, tax taken at source and National Insurance Contributions collected.
• P60

  § Given to an employee by an employer at the end of every Tax year.
• P60

  If an individual has other income and must file tax return by themselves
• P45

  § Summary of: income received, tax taken at source and National Insurance Contributions collected.
• P45

  § Given to an employee by an employer when the employee leaves the employment.
• P45

  § to give it to the new employer so they know what tax code should they apply and how much tax was already paid from the beginning of the current tax year
• Self-employed taxpayers do not pay tax at source
• self employed SELF ASSESS their taxation and  pay it to HMRC in instalments or once per year (it depends on the amount)
• Personal allowance for EVERY TAXPAYER:

            £12,570 

  § This is the amount which everybody can earn without paying taxes on it.

  The salary/profit is reduced by this amount and tax is paid on the remaining amount
• if someone’s total income (all sources combined) is above £100,000 then: Personal allowance is reduced by £1 for every £2.
• How much would you need to earn in order to lose the PA altogether?

  £125,140
• Gift Aid means charities and Community Amateur Sports Clubs (CASCs) get an extra 25p (from HMRC) for every £1 donated.
• If you pay higher rate tax, you can also claim the difference between the higher rate of tax (40%) and the basic rate (20%) on the total (gross) value of your donation. It means simply that your 20% basic tax band is extended by grossed amount of the gift-aid.
• Income is taxable on the basis of which CLASS it falls within
• Each individual has their own set of allowances
• Income from all sources is grossed up
• Income tax rates are progressive from 0% to 45%
• Higher rate taxpayers will get relief for gift aid payments by extension of the basic rate band.