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Über dieses Buch

The 43rd annual edition of the leading guide to taxation in Britain. This practical and user-friendly guide is a bestseller with students, professionals, accountants and private individuals, explaining in simple terms how the UK tax system works and how best to minimise tax liabilities.

Inhaltsverzeichnis

Frontmatter

Chapter 1. This Year’s Tax Changes

This chapter summarises many of the changes to the tax rules and rates which take effect for 2014–15. Also included are some important changes announced for future years. Tax planning pointers have been included in italics and these are amplified in Chapter 26. At the end of this chapter you will find a table of key rates and allowances for 2014–15.

Walter Sinclair, Barry Lipkin

Chapter 2. The Basis of Your Tax Liability

Individuals, partnerships, estates, trusts, companies, and certain other organisations that are resident in the UK are taxable on their income arising here. They are also liable on income arising abroad subject to the rules outlined later in this book. The taxation of the income of individuals is covered first; partnerships, estates, trusts and companies being dealt with in later chapters.

Walter Sinclair, Barry Lipkin

Chapter 3. Personal Reliefs

According to your circumstances you can claim certain personal tax reliefs which are deducted from your total income in arriving at the amount on which you pay income tax.

Walter Sinclair, Barry Lipkin

Chapter 4. Annual Interest and Other Payments

It is important as an individual taxpayer to ascertain whether or not you have an obligation to deduct income tax from any interest or other recurring payments which you propose to make. Subject to the detailed rules, a useful guideline is to check the position before making payments to overseas residents or any payments (other than UK interest) which are for commercial purposes.

Walter Sinclair, Barry Lipkin

Chapter 5. Computing Your Income Tax Bill

Your ‘total income’ (see below) less your allowances for the tax year (3.0) will be subjected to income tax at the basic higher and additional rates according to the following table:

Walter Sinclair, Barry Lipkin

Chapter 6. Husband, Wife, Civil Partners and Children

This chapter deals, in particular, with the taxation of husband and wife as from 6 April 2000. From 5 December 2005, the rules generally also apply to civil partners (6.9). The concept of the present independent taxation system goes back to 6 April 1990 and reference should be made to previous editions of this book for intervening changes or for the rules which applied for 1989–90 and earlier years. The latter included an optional form of separate taxation of spouses, which merely allocated their joint liability, and an elective form of truly separate taxation limited to a wife’s earnings. (Some of the rules for independent taxation have been mentioned in Chapter 3.)

Walter Sinclair, Barry Lipkin

Chapter 7. Income from Land and Property

The amount of income that you derive during the tax year from letting property such as a house, flat, factory or shop, less the deductions you may claim represent your net income from letting property and must be shown separately on your tax return. You must return your gross property income including certain lease premiums and also wgive full particulars of your expenses. If up to 5 April 1995 the income was derived from furnished lettings then the assessment was under Schedule D Case VI (15.1); otherwise it was generally under Schedule A. From that date to 31 March 2009, Case VI on furnished lettings only continued for corporation tax purposes.

Walter Sinclair, Barry Lipkin

Chapter 8. Income from Dividends and Interest

This chapter broadly covers savings income and dividends, including certain tax efficient investments. From 6 April 2005 the legislation contained in ICTA and subsequent Finance Acts was broadly consolidated into ITTOIA Ss365– 573 and Parts 5–7 of Sch 2 and references to schedules for income no longer apply although the basic rules remain.

Walter Sinclair, Barry Lipkin

Chapter 9. Life Assurance

Earlier in this book, certain tax aspects of life assurance are touched on. This chapter deals with them in more detail, together with related subjects such as permanent health insurance and purchased life annuities.

Walter Sinclair, Barry Lipkin

Chapter 10. Income from Employments and PAYE

The taxation of your income from employments or from any office that you hold derives mainly from earlier legislation. Until 5 April 2003, such income was normally taxed under Schedule E and generally a receipts basis applied (10.13). Schedule E was divided into three ‘Cases’ which focused on your resident, ordinarily resident and domiciliary status (TA S19).

Walter Sinclair, Barry Lipkin

Chapter 11. Income from Businesses and Professions

The profits from trades, professions and vocations were normally assessed for 2004–05 and previous years under Schedule D Case I (trades) and Schedule D Case II (professions and vocations). However, from 2005–06 onwards, with the introduction of ITTOIA (2.10), the income is no longer classified for income tax purposes into schedules, although the basic rules remain. (ITTOIA does not apply for corporation tax purposes.) There are certain special rules which apply to partnerships (Chapter 12) and companies (Chapter 13).

Walter Sinclair, Barry Lipkin

Chapter 12. Partnerships

Special rules relate to the taxation of partnerships and these are covered in the following sections. Note that the present system operates generally from 1997–98 and for partnerships starting after 5 April 1994 (12.2). From 2005–06, rewritten legislation is applied by Ss846–863 in ITTOIA (2.10).

Walter Sinclair, Barry Lipkin

Chapter 13. Companies

The following is a general outline of the taxation of companies that are resident in the UK or are trading here through a branch or agency. In the latter case it is normally only the profits arising in this country that are taxable here. It must be stressed that the actual provisions are lengthy and many details have been omitted in this summary. Note that ITTOIA (2.10) has no effect for corporation tax purposes. However, consolidating corporation tax legislation (CTA 2009 and 2009–10) has been introduced.

Walter Sinclair, Barry Lipkin

Chapter 14. Pensions

As we live longer, but are left with greater responsibility for our welfare in later life, it becomes more and more important to make the most of the opportunities presented to us by pension tax reliefs.

Walter Sinclair, Barry Lipkin

Chapter 15. Miscellaneous Aspects

The consolidating and rewriting statutes, ITTOIA (2.10), ITA 2007 and CTA 2009 eliminated the classification of income under the previous schedules and cases, Schedule D Case VI being particularly relevant to this chapter. Although the basic rules have largely continued, each type of income taxable under miscellaneous profits is now specified in law, rather than swept up by exception. Such income includes:(1)Income from underwriting (if not a business), but Lloyd’s underwriting profits (15.9) were assessed as a trade (under Schedule D Case I).(2)Income from guaranteeing loans.(3)Income from dealing in futures. However, this is now more likely to be subject to capital gains tax (20.31).(4)Certain capital sums received from the sale of UK patent rights.(5)Post-cessation receipts (11.28).(6)Certain ‘anti-avoidance’ assessments (15.10).(7)Enterprise allowance payments after 17 March 1986. Previously Case I or II applied. Case VI also applied to payments before 18 March 1986 which continued subsequently (11.4).(8)Profits on the disposal of certificates of deposit.(9)Gains on certain life policies held by companies.(10)The surplus from converting from the cash to the earnings basis from 1999–2000 (11.27).

Walter Sinclair, Barry Lipkin

Chapter 16. Returns, Assessments and Repayment Claims

This chapter covers administrative matters, largely to be found in the Taxes Management Act 1970 (TMA). With effect from 1996–97, radical changes took effect, with the introduction of the self-assessment system. This is dealt with below.

Walter Sinclair, Barry Lipkin

Chapter 17. Domicile and Residence

After protracted consultations on fundamental aspects of the UK taxation of non-residents and non-domiciliaries, which spanned more than three years, FA 2013 set out the UK’s first comprehensive statutory regime for determining resident status of individuals for tax purposes. The proposals were originally intended to operate from 6 April 2012, but were postponed to commence on 6 April 2013. As successive drafts became available, we kept readers advised of the latest known key factors (17.5.1), which were expected to come into effect between publication dates, such that our 2012–13 edition presented a summary of the proposals as published on 21 June 2012 (2011–12 edition — on 17 June 2011). Our 2013–14 edition reflected that the new regime was in force, FB 2013 was before Parliament and in May 2013 HMRC had published a 101 page ‘Guidance Note — RDR3’ and ‘Overseas Workday Relief — RDR4’ which set out their views on numerous detailed aspects.

Walter Sinclair, Barry Lipkin

Chapter 18. Tax on Foreign Income

Many UK residents who are not domiciled in any part of the UK or are not ordinarily resident here have for many years enjoyed the facility to pay tax in respect of certain foreign income and gains by reference to amounts actually or deemed to be remitted to the UK in each tax year, rather than by reference to the amounts arising for the year.

Walter Sinclair, Barry Lipkin

Chapter 19. Non-Residents, Visitors and Immigrants

This chapter has been kept as short as possible, in order to provide a simplified introduction to the UK’s approach to taxing your income, if you are a non-resident, visitor or immigrant. We have many more taxes, for which you should refer to the relevant chapters.

Walter Sinclair, Barry Lipkin

Chapter 20. Capital Gains Tax

FA 2008 includes major changes to the capital gains tax rules which apply to individuals, trustees and personal representatives, but not companies. For disposals after 5 April 2008, there is a rate of 18 per cent, indexation was withdrawn, as was taper relief. Furthermore, all assets held on 31 March 1982 are deemed to be acquired on that date at market value. However, from 23 June 2010, there is also an additional rate of 28 per cent.

Walter Sinclair, Barry Lipkin

Chapter 21. The Taxation of Trusts and Estates

A trust is brought into existence when a person (the settlor) transfers assets to trustees for the benefit of third parties (the beneficiaries). Another word for a trust is a settlement. A trust may also be created under a will when a person (the testator) sets aside the whole or a portion of his estate to be administered (by trustees) for the benefit of his heirs or other beneficiaries. (Where an individual declares himself to be a trustee of certain of his assets a trust will also come into existence.)

Walter Sinclair, Barry Lipkin

Chapter 22. Inheritance Tax

This chapter deals with what was originally known as capital transfer tax, but following sweeping changes in the 1986 Finance Act was renamed inheritance tax. The name applies from 25 July 1986. However, the inheritance tax rules cover transfers on and after 18 March 1986.

Walter Sinclair, Barry Lipkin

Chapter 23. An Outline of VAT

VAT was introduced into the UK on 1 April 1973 with an original rate of 10 per cent. On 18 June 1979 a single rate of 15 per cent replaced the then 8 per cent standard and 12½ per cent higher rates. This rate was increased to 17½ per cent from 1 April 1991 (5 per cent now applying in isolated cases — 23.15). As a temporary measure, the standard rate was reduced to 15 per cent from 1 December 2008 reverting to 17½ per cent on 1 January 2010. To combat abuse of the temporary reduction, a supplementary charge of 2½ per cent applied from 25 November 2008 to specified cases of supply to customers who cannot recover all the VAT or from 1 April 2009 where abnormal prepayments occurred.

Walter Sinclair, Barry Lipkin

Chapter 24. Stamp Duty

Stamp duty has long been the most modest of capital taxes but the ‘take’ has been increasing. Although many of the rates remain very low, stamp duty is likely to arise on some of your major capital transactions and can involve significant sums. Moreover, persistent avoidance has provoked legislative action in respect of ‘enveloped’ high value residential properties (15.10.26), introduced from 22 March 2012 with a threshold of £2m, which has been reduced to £500,001 from 20 March 2014. The SDLT charges entered into force before the scope of the exemptions from this regime were settled — mainly with effect from 17 July 2013. Thus the special SDLT provisions will have caught some transactions prior to that date, where the purchaser would now be within an exemption. The brief outline given below concentrates on the ad valorem duties, which are charged according to the value of a transaction, rather than the less significant fixed duties.

Walter Sinclair, Barry Lipkin

Chapter 25. Social Security

The main social security legislation is now comprised in the Social Security Acts of 1992 and supporting statutory instruments and amendments. The subject is a wide one and only an outline is given below.

Walter Sinclair, Barry Lipkin

Chapter 26. Tax-Saving Hints

The following pages deal with various ways in which you can arrange your affairs to reduce your tax bill. This should not be done by tax evasion which is completely illegal (15.10) and may result in your tax bill being increased by the addition of interest and penalties (16.9.2). You should always fully disclose your taxable income to HMRC in your income tax return (16.2).

Walter Sinclair, Barry Lipkin

Chapter 27. Tax Tables

Walter Sinclair, Barry Lipkin

Backmatter

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