Category: Income Tax

Similarity to Irish Tax Tax is charged through the United Kingdom on a uniform basis. This is unlike the position with most laws, where England and Wales, Scotland and Northern Ireland have different legislation for their separate legal systems. Scotland has the power to vary income tax rates and bands within limits. Most taxes are […]

Employment or Self-Employment? There is a fundamental difference between income received as an employee and as a self-employed person/independent contractor. Where income is paid as employment income, the employer must deduct income tax and National Insurance contributions under the PAYE system and remit it to HMRC. There are quite different rules in terms of allowable […]

Savings Bank and Building Societies used to pay interest net of standard rate tax (20%).  Since 6th April 2016, interest is generally paid gross of tax. From that date, a tax-free personal savings allowance was introduced basic rate taxpayers can earn up to £1000 of interest tax-free, per tax year higher rate taxpayers can earn up […]

Calculation of Taxable Income The receipt of rental income is treated as the income of a “property business”.  There are rules for computing property business profits. All income from all of the landlord’s properties is added together for each tax year. Certain expenses are deducted and the net amount is assessable to income tax. In […]

General Capital allowance rules in tax law set out the extent to which deductions from profits are allowed in relation to capital expenditure.  The basis is different from the way capital expenditure is allowed in financial accounts, which use depreciation charges to spread the capital expenditure out fairly over time. The tax treatment of capital […]

Carrying Losses Forward Where there is a trading loss under the accounts as adjusted for taxation, there are a number of different ways in which the losses can be used. Losses can be augmented by capital allowances. One option is to carry the loss forward against future trading profits. They must then be set against […]

Income tax on partnership profits applies in much the same way as in Ireland. Each partner is taxed individually. This applies both to partnerships formed under the Partnerships Act, and Limited Partnerships formed under the Limited Liability Partnerships  (LLPs) which has no counterpart in Ireland. Each partner is assessed on his share of the partnership […]

Self Assessment Obligation The self assessment system in the United Kingdom requires the tax payer to calculate his own tax liability, make a return and pay any tax due. Generally, an individual will be required to make are return where self employed / trading/ in business a company director owns UK property with rent of […]

Employees Most employees under state pension age pay Class 1 contributions.   The primary contribution is by employee and the secondary contribution is by employer. They are percentage based contributions levied on gross earnings in excess of a certain sum. Earnings are all earnings paid in cash or readily convertible to cash.  NIC are paid on […]

What is a Trade? The profits of an individual who undertakes a trade or business personally (as opposed to through company or some other vehicle) is subject to special income tax rules.  Tax law calls business activity the carrying on of a “trade”. Whether or not an activity is a “trade” is a question of […]