Personal Tax Basics
Income tax
Capital Gains tax
Value Added tax
Income Tax
Paid on the trading income less deductible expenditure
Need to distinguish income from capital profits which attract capital gains tax
Tax is deducted at source through PAYE
Generally income is of a recurrent nature salary, interest on bank accounts,
share dividends
Self-employed pay tax on income after deduction of business expenses e.g. cost of
materials etc.
Income tax year runs from 6 April - 5 April
Tax rates 2020/2021 (e.g. trading income or salary):
o £0 - £37,500 20% basic rate
o £37,501 - £150,000 40% higher rate
o over £150,000 45% additional rate
o first £37,500 at 20%, the rest over that up to £150,000 at 40% - first £37,500
above £12,500 personal allowance
Personal allowance 2020/2021 is £12,500 reduced by £1 for every £2 that
net income exceeds £100,000 tapers until there is no personal allowance at
£125,000
Dividends basic rate of 7.5%, higher rate of £32.5%, additional rate of 38.1%
o £2,000 tax free dividend allowance
Personal savings allowance (interest paid on money held in account) £1,000 for
basic taxpayers, 500 for higher rate taxpayers, 0 for additional rate taxpayers
For the 2020/2021 tax year, tax is payable on 31 Jan 2022
o can be paid in 3 tranches:
o 1st interim payment on 31 Jan during relevant tax year
o 2nd interim payment on 31 July following tax year
o 3rd interim payment on 31 Jan following tax year.
Capital Gains Tax
Charged on capital profits e.g. sale of a property, sale of shares
Generally of a non-recurring nature
Sale of a piece of equipment would usually be a wasting asset and exempt from
capital gains tax
Date for payment is the 31 Jan following the tax year in which the gain arose.
Normal Rates 2020/2021
o 10% for basic rate taxpayers
o 20% for higher/additional rate taxpayers
Residential Property Rates 2020/2021
o disposals of residential property that do not qualify for private
residence relief:
18% for basic rate taxpayers
Income tax
Capital Gains tax
Value Added tax
Income Tax
Paid on the trading income less deductible expenditure
Need to distinguish income from capital profits which attract capital gains tax
Tax is deducted at source through PAYE
Generally income is of a recurrent nature salary, interest on bank accounts,
share dividends
Self-employed pay tax on income after deduction of business expenses e.g. cost of
materials etc.
Income tax year runs from 6 April - 5 April
Tax rates 2020/2021 (e.g. trading income or salary):
o £0 - £37,500 20% basic rate
o £37,501 - £150,000 40% higher rate
o over £150,000 45% additional rate
o first £37,500 at 20%, the rest over that up to £150,000 at 40% - first £37,500
above £12,500 personal allowance
Personal allowance 2020/2021 is £12,500 reduced by £1 for every £2 that
net income exceeds £100,000 tapers until there is no personal allowance at
£125,000
Dividends basic rate of 7.5%, higher rate of £32.5%, additional rate of 38.1%
o £2,000 tax free dividend allowance
Personal savings allowance (interest paid on money held in account) £1,000 for
basic taxpayers, 500 for higher rate taxpayers, 0 for additional rate taxpayers
For the 2020/2021 tax year, tax is payable on 31 Jan 2022
o can be paid in 3 tranches:
o 1st interim payment on 31 Jan during relevant tax year
o 2nd interim payment on 31 July following tax year
o 3rd interim payment on 31 Jan following tax year.
Capital Gains Tax
Charged on capital profits e.g. sale of a property, sale of shares
Generally of a non-recurring nature
Sale of a piece of equipment would usually be a wasting asset and exempt from
capital gains tax
Date for payment is the 31 Jan following the tax year in which the gain arose.
Normal Rates 2020/2021
o 10% for basic rate taxpayers
o 20% for higher/additional rate taxpayers
Residential Property Rates 2020/2021
o disposals of residential property that do not qualify for private
residence relief:
18% for basic rate taxpayers
