I am on a series of articles to explain basically the income tax of top 25 GDP countries which invite most of the Indian exporters/experts from India who help these countries to grow, prosper, and distribute wealth among those associated with them.
It is time for United Kingdom economy to get the priority.
Income tax U.K.
The Government website
invites you to learn the basics. The current tax year is from 6 April 2021 to 5 April 2022.
On what does one pay income tax?
But what about those which do not attract tax?
With one of the most attractive income tax rules, we are tempted to know the tax slabs, and other details.
Income tax rates and bands
The following table shows the tax rates one pays in each band if one has a standard personal allowance of £12,570.
Yes, I shall give details of income tax bands in Scotland separately.
|Band||Taxable income||Scottish tax rate|
|Personal Allowance||up to £12,570||0%|
|Basic rate||up to £12,571 to £50,270||20%|
|Higher rate||up to £50,271 to £150,000||40%|
|Additional rate||over £150,000||45%|
One does not get a Personal Allowance on taxable income over £125,140.
Like yourself, I am keen to learn about tax bands in Scotland.
What will one pay in Scotland?
What you’ll pay
The table shows the 2021 to 2022 Scottish Income Tax rates you pay in each band if you have a standard Personal Allowance of £12,570. One does not a personal allowance if the earnings are over £125,140.
|Band||Taxable income||Scottish tax rate|
|Personal Allowance||Up to £12,570||0%|
|Starter rate||£12,571 to £14,667||19%|
|Basic rate||£14,668 to £25,296||20%|
|Intermediate rate||£25,297 to £43,662||21%|
|Higher rate||£43,663 to £150,000||41%|
|Top rate||over £150,000||46%|
More important information from government’s web site.
What about capital gains tax?
One pays Capital Gains Tax on the gain when it is sold or disposed of. We learn that:
One comes across gift as a tax item. Is it so?
Some gifts are exempt from Inheritance Tax especially those made more than 7 years before the person died. However, not all gifts are exempt.
Most gifts a person makes during their lifetime — except gifts covered by an exemption — are called potentially exempt transfers. This is because a gift is exempt from Inheritance Tax if the person survives for 7 years after giving it.
More information for an in- satiating mind.
It is understandable that one can’t claim expenses as well as avail £1,000 tax-free ‘trading allowance’.
Let us have some more information on business related tax.
What does one claim as capital allowances?
By using traditional accounting, one can claim as capital allowances on buying of equipment, machinery, business vehicles like cars, vans, or lorries.
If one uses an asset personally as well as for business purposes, that proportion of expenses for business gets duly recognized for business.
With Covid related developments, working from home with proportionate share of expenses for business purposes gains importance. Some of them of prominence can be heating, telephone/internet expenses, rent, electricity, mortgage interest on property etc.
The website of the government of U.K. contains 45 items of business-related ones for easy understanding for medium and big business.
What about accounting period for corporation tax?
Corporate tax return covers the accounting period for corporation tax. Yes, I agree with you that it can’t be longer than 12 months and the same as financial year covered by the company or any association’s annual accounts. The accounting period defines timelines for paying corporation tax by sending or filing a company tax return.
The purpose of this article is to give you a bird’s view of the simple tax system in U.K. which houses one of the top economies with business going back to centuries. Most of the Indian systems/business/legal models simply mirror UK’s economy and have shown enormous growth. My next article will totally deal with U.K. business only.
Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc. before acting because of the above write up. The possibility of other views on the subject matter cannot be ruled out. By use of the said information, you agree that Author/Tax Guru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors, or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.