Finance & Accounting
Pages 10 (2510 words)
Taxation Name: Institution: Taxation The U.K taxation system Who is taxed and under what circumstances? Any person who has worked in the UK for a length of time i.e. either a UK citizen or an immigrant who has a work permit is required to pay tax in the UK (Adam, Kaplan and Institute for Fiscal Studies, 2002).
However, if people receive benefits or perks from their employer, they may be taxable (Adam, Kaplan and Institute for Fiscal Studies, 2002). Income from partnerships or self-employment, pension income such as state pension, retirement annuity and personal or company pension, are also taxable as stated in the UK tax laws. Additionally, pensioner bonds, trust income and investment income, includes dividends on company shares except dividend income from ISAs, are also taxable. Other taxable income includes Rental income, State benefits such as Carer’s Allowance, Jobseeker’s allowance, Employment and Support Allowance, Incapacity Benefit, and weekly Bereavement Allowance among others. The income tax rates in the UK depend on an individual’s personal income. The UK personal annual tax rates for 2010-2011 range from 10% to 50% as shown in the table below ((Adam, Kaplan and Institute for Fiscal Studies, 2002). Rate Income (GBP) % Starting savings rate ?1-2400 10% Basic rate ?1-37,400 20% Higher rate ?37,401-150,000 40% Additional rate 0ver ?150,000 50% According to Adam, Kaplan and Institute for Fiscal Studies (2002), the 10% rate shows the tax rate for anybody who saves an income of up to GBP 2,400. The dividend income below GBP 37,400 is taxed at 10% while that above GBP 37,400 to GBP 150,000 is taxed at 32.5%. In addition, a tax of 42.5% is taxed on dividend income above GBP 150,000. ...