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Tax Condensed Notes
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Tax Workbook SGS 3 – Taxation of IndividualsSGS 23 – Corporate Taxation
Income Tax
Capital Gains Tax (CGT)
Direct Taxes
Corporation Tax
Inheritance Tax (IHT)
Value Added Tax (VAT)
Indirect taxes
Stamp Duty Land Tax (SDLT)
Income receipts Money generated on a regular basis
Capital receipts Money generated from a one-off transaction
Income expenditure Expenses incurred as an integral party of day-to-day trading
Capital expenditure Expenses incurred on a one-off transaction
Tax year for individuals 6 April to 5 April
Financial years for corporations 1 April to 31 March
Accounting period for corporations Self-determined
1 Non-Savings Income A
Plus Savings Income B
Plus Dividends Income C
= TOTAL INCOME D
2 Less Tax Reliefs (E)
= NET INCOME F
3 Less Personal Allowance (G)
= TAXABLE INCOME H
4 Less Savings Income (B)
Less Dividends Income (C)
= TAXABLE NON-SAVINGS INCOME
Apply Relevant Tax Rate Z
5 SAVINGS INCOME B
Less Personal Savings Allowance (I)
= TAXABLE SAVINGS INCOME
Apply Relevant Tax Rate Y
6 DIVIDENDS INCOME C
Less Dividends Income Allowance (2,000)
= TAXABLE DIVIDENDS INCOME
Apply Relevant Tax Rate X
7 Non-Savings Income Liability Z
Plus Savings Income Liability Y
Plus Dividends Income Liability X
= TOTAL TAX LIABILITY
Figure in Total Income
Figure Included Excluded
Non-Savings Income Gross annual income Trivial benefits (excluding cash) less than £50
Property income (e.g. rent) Gaming and betting prizes
Trading income Income from Individual Savings Accounts (ISAs)
Benefits in kind (value provided by employer) – Income from Child Trust Fund or Junior ISA
Health insurance Compensation for unemployment up to £30,000
Company cars Periodic payments for personal injury
Low-interest or free loans above £100,000 Some redundancy payments
Figure in Net Income
Tax Reliefs Pension scheme contributions
Interest on qualifying loans, includes loans to –
Buy an interest in a partnership
, Tax Workbook SGS 3 – Taxation of Individuals
SGS 23 – Corporate Taxation
Contribute capital to a partnership
Buy shares in a close company
Buy shares in an employee-controlled company or invest in a cooperative
Figures in Taxable Income
Personal Allowance Net income below £100,000 £12,500 (for 2020-2021)
Net income between £100,000 and £125,000 £12,500 – [(Net Income – £100,000) ÷ 2]
Net income above £125,000 £0
Figures in Taxable Non-Savings Income
Relevant Tax Rate Basic £0 – £37,500 20%
Higher £37,501 – £150,000 40%
Additional Over £150,000 45%
Figures in Taxable Savings Income
Personal Savings Personal Savings Allowance contributes to the volume in the ‘measuring jug’ (uses up the bands)
Allowance Use the Taxable Income figure to determine the amount of Personal Savings Allowance
Basic £1,000
Higher £500
Additional £0
Relevant Tax Rate Basic £0 – £37,500 20%
Higher £37,501 – £150,000 40%
Additional Over £150,000 45%
Figures in Taxable Dividends Income
Dividends Allowance No tax payable for on the first £2,000 of dividends income
Dividends Income Allowance contributes to the volume in the ‘measuring jug’ (uses up the bands)
Relevant Tax Rate Tax years for individuals – 6 April to 5 April
Basic 7.5%
Higher 32.5%
Additional 38.1%
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