TAX matters for UK citizens and residents
Tax in the UK
Tax is, for the ordinary employee born and living in the UK, very simple. However as soon
as you have investments, property, inheritances or are not a simple UK soul then it can
get very complex. I am NOT a tax specialist, but
have a normal working knowledge of the subject. The notes that follow are very simplified.
In particular most of the complexities that have arisen through historic rule changes have
been ignored, (but could still affect you if looking back at activities in years when
previous rules and rates applied), and I also assume that you (and your partner, if
applicable) have UK Residency
and Domicile, ( if you are not then you absolutely must seek advice).
As a rough guide, if you think that something could affect
you, seek advice from an IFA or your accountant. ( If you do not already have an
accountant then start with an IFA, it'll be free at first, and if an accountant is needed
most IFAs can recommend one).
Before we start, a simple rule - tax avoidance is legal, (
you do not need to pay more than you have to), but evasion is illegal. Be very careful
when dealing with non UK organisations as their advice may, for the UK based person,
result in evasion ( even if unwitting). For example, using an overseas company with
nominee directors in countries that do not report to the UK Inland Revenue is legal. But
not then telling the UK Inland Revenue about any income/profit is evasion, a criminal
offence.
The main forms of tax are as follows:-
1) Income
Tax
Levied on income in most of it's many forms, whether from the UK or overseas. ( This is an
important note - the fact that you have invested money offshore and get paid gross does
not mean that it is tax free - unless you are advised otherwise by a UK authorised
financial professional you should declare the money, and pay tax. Failure to do so is
EVASION, and very bad news).
Non
Taxable income, ( ie Tax free).
Tax
Rates table.
Tax
Allowances table.
Tax
Reliefs and Deductions
2) Capital
Gains Tax (CGT)
Levied on Capital Gains worldwide when realised ( no tax on paper gains, only real ones).
Capital Gains are made when you make a profit on an investment such as a share, a
property, a unit trust etc.
Technically a gain is made on disposal, which in real life means sale, but the term
disposal neatly includes giving things away as well, thereby kicking into touch a lot of
the more obvious avoidance ideas.
Non
Taxable gains, (ie Tax free).
Tax
Rates table.
Tax
Reliefs and Deductions
3) Inheritance
Tax (IHT)
Levied on estates after death. Worldwide assets are included, but most people actually pay
no tax as they die without a large enough estate to cross the threshold.
Once again the technical side prevents avoidance by death
bed giving away of assets.
Non
Taxable transfers, (ie Tax free).
Tax
Rates table.
Tax
Reliefs and Deductions
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