Tax Return

 UK Tax System

Income Tax  
Council Tax  
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Stamp Duty  
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Prime Advisors Ltd,
Ocean Air house
Suite 200, Floor 1,
750-760 High Road, Leytonstone,
London E11 3AW
Tel - 0044 208 530 6929
Fax - 0044 208 989 1179
E-mail: primeadvisors@yahoo.co.uk



Individuals are required to pay tax on income arising from employment, self employment, investments and on benefits in kind (such as private healthcare provided by an employer).

Income tax is national and is collected by the Inland Revenue.  With the exception of Scotland (where the Scottish Parliament has, as yet unused, powers to raise or lower taxes) there are no local income taxes within the UK.

A personal 'income tax free' allowance is provided to each individual taxpayer each year and only income in excess of this allowance is taxed.

Income Tax Allowances 2001/2002 2002/2003
Personal 4,535 4,615
Personal (Age 65-74) 5,990 6,100
Personal (Age 75 +) 6,260 6,370
Children's Tax Credit 5,200 5,290
Baby Rate n/a 10,490
MCA 65 before 6/4/2000   5,365 5,465
MCA (Age 75+)   5,435 5,535


The Married Couple's Allowance (MCA) is restricted to 10% . The income limit for age related allowances is now 17,600 (17,000 2000/01). Allowances reduce by 1 for every 2 of income above the income limit (but with a minimum MCA of 2,110). The widow's bereavement allowance has been abolished for deaths occurring after 5/4/2000.

In 2001/02 The Government introduced Childrens Tax Credit (CTC) for parents, irrespective of marital status, who have at least 1 child under 16 living with them. The maximum allowance is 5,290 and relief is given at 10%. If the claimant is a 40% taxpayer then the allowance is reduced at the rate of 2 for every 3 of income above the threshold.

Subtract your personal allowance from the income you have earned to get your taxable income. Then income tax is charged on your taxable income at the following rates:

Tax Rate (%) 2001/2002 2002/2003
10% the first 1,880 the first 1,920
22% (1999/00 at 23%) the next 27,520 the next 27,980
40% over 29,400 over 29,900


Dividend income is taxed differently. Dividend income is paid with a tax credit of 10%. Taxpayers who pay tax at 10% or 22% pay no further tax. Those who pay no tax at all cannot reclaim tax paid on dividends. 40% taxpayers pay tax on dividends at 32.5%. Simple really! 




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