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CH3 Intro to Income Tax - Coggle Diagram
CH3 Intro to Income Tax
chargeable income is:
- employment income
- trading income
- rental income
- savings income (interest on loans, bank and building society accounts)
- dividend income
- income from taxable state benefits (carer's allowance, jobseeker's allowance, state pension)
- miscellaneous income (casual work)
exempt income includes:
- interest on National Savings Certificates
- income (interest or dividends) from ISAs, including Junior ISAs
- betting, competition, lottery and premium bond winnings
- some social security benefits, such as:
housing benefit
attendance allowance
child benefit
child tax credit
disability living allowance
personal independence payment
universal credit
working tax credit
- scholarships
- income tax repayment interest
- apprenticeship bursaries paid to individuals leaving local authority care
- compensation payments made under certain payment schemes, such as Windrush, Post Office Process Review and Victoms of Overseas Terrorism compensation schemes
income tax is paid by individuals (employees, investors, partners or self-employed) on their taxable income;
NOT companies - they pay corp tax :question:
-
personal allowance
(12,570)
deducted from types of income in this order:
- non-savings income
- savings income
- dividend income
PA is reduced by £1 for every £2 if net income exceeds £100,000
[1] income tax liability
non-savings income
taxable income (after PA)
BRB: 0-37,700 (20%)
HRB: 37,700-125,140 (40%)
ARB: 125,140+ (45%)
calculated in order:
- NSI
- SI
- DI
-
-
-
gift aid
to qualify:
- donor must give charity a Gift Aid declaration (in writing, telephone or internet)
- donor must pay amount of income tax or CGT which is at least equal to the amount of gift aif the charity will reclaim in the tax year in relation to the donation
- charity must be located in the UK
extend BRB by taking the cash donation paid and x100/80 to find gross donation, then x20% to extend the BRB by that donation.
marriage allowance
spouse/civil partner may elect to transfer £1,260 of their PA to their spouse.
transferor spouse must either have no tax liability or only be a basic rate taxpayer after such reduction in their PA.
recipient spouse must be basic rate taxpayer.
transferred allowance is given effect by a reduction in the recipient spouse's income tax liability at the basic rate (PA*20%)