Adjusting the Profits for Tax There is a certain deal of freedom within accounting rules. There may be elements of subjectivity in the way certain transactions and positions are shown in financial accounts. For policy reasons, certain types of deductions are not available or are limited or treated differently in the tax computation, in order […]
Expenses incurred by an employee are deductible from tax if they are wholly, exclusively, and necessarily incurred in the performance of employment. This test is quite strict and limiting. Further categories of expenses are deductible. Contributions to an occupational pension scheme, if deducted by the employer, are up to limits and subject to conditions. Subscription […]
Benefits in Kind In addition to salary earnings, the value of benefits in kind received by employees e.g. a company car is subject to income tax. There are certain exemptions for employees earning less than a certain amount. Where employers reimburse expenses, the employer must report these on form P11D (as in Ireland). A claim […]
Every person in the United Kingdom has a national insurance number consisting of two letters, six digits, and another letter. National insurance does not apply to a person’s earnings if they earn below the national lower earnings limit, which has varied from year to year. Primary Class 1 contributions are applied by employees and are […]
Income Taxes If an individual or company is resident in Ireland but undertakes a farming trade or business in the United Kingdom, there will be UK and Irish Taxation consequences. Generally, credit will be given for tax paid in the country where the activity is undertaken against tax payable in the country of residence. A […]
Similarity to Irish Tax Tax is charged through the United Kingdom on a uniform basis. This is unlike the position with most laws, where England and Wales, Scotland and Northern Ireland have different legislation for their separate legal systems. Scotland has the power to vary income tax rates and bands within limits. Most taxes are […]
Employment or Self-Employment? There is a fundamental difference between income received as an employee and as a self-employed person/independent contractor. Where income is paid as employment income, the employer must deduct income tax and National Insurance contributions under the PAYE system and remit it to HMRC. There are quite different rules in terms of allowable […]
Savings Bank and Building Societies used to pay interest net of standard rate tax (20%). Since 6th April 2016, interest is generally paid gross of tax. From that date, a tax-free personal savings allowance was introduced basic rate taxpayers can earn up to £1000 of interest tax-free, per tax year higher rate taxpayers can earn up […]
Calculation of Taxable Income The receipt of rental income is treated as the income of a “property business”. There are rules for computing property business profits. All income from all of the landlord’s properties is added together for each tax year. Certain expenses are deducted and the net amount is assessable to income tax. In […]
General Capital allowance rules in tax law set out the extent to which deductions from profits are allowed in relation to capital expenditure. The basis is different from the way capital expenditure is allowed in financial accounts, which use depreciation charges to spread the capital expenditure out fairly over time. The tax treatment of capital […]