|
Income tax is charged on the income of
individuals such as salary, trading profits
(if self employed) and investment income
in a tax year. A tax year runs from 6th
April to 5th April in the following calendar
year.
The rates at which an individual is taxed for
2010/2011 are:
| |
Rate
of tax |
Income
between |
| Basic rate |
20% |
0 |
37,400 |
| Higher rate |
40% |
37,401 |
150,000 |
| Additional rate |
50% |
150,001 |
No upper limit |
Individuals have a personal allowance of £6,475.
Their incomes up to this amount are tax free.
For employees the income tax is deducted by
their employer and paid to the Inland Revenue
on their behalf.
If an individual is self employed or has other
sources of income in addition to a salary
then they will be required to make payments
in January and July of each year to ensure
that all their tax liabilities are paid.
Their tax liabilities are calculated by the
completion of a Self Assessment Tax return
that must be completed and submitted to the
Inland Revenue by 31 January of the following
tax year. Financial penalties are in force
if the return is submitted late and interest
and surcharges are charged on the late payment
of income tax.
All directors, self employed and people with
other sources of income are required to complete
tax returns and professional advice should
be sought if you receive one. |
