{"id":785,"date":"2020-05-14T10:55:12","date_gmt":"2020-05-14T09:55:12","guid":{"rendered":"https:\/\/thefinancialeducation.co.uk\/?p=785"},"modified":"2020-05-14T11:11:09","modified_gmt":"2020-05-14T10:11:09","slug":"personal-tax-uk","status":"publish","type":"post","link":"https:\/\/thefinancialeducation.co.uk\/index.php\/2020\/05\/14\/personal-tax-uk\/","title":{"rendered":"Personal Tax UK"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Types of Tax<\/h2>\n\n\n\n<p>\u00a7Income Tax (Income, Dividends, Savings, Other) \u00a7 National Insurance Contributions \u00a7 <abbr class='c2c-text-hover' title='is anything that increases one\u2019s ability to generate value. It can be used to increase value across a wide range of categories, such as financial, social, physical, intellectual, etc. In business and economics, the two most common types of capital are financial and human. Capital is the money used to build, run, or grow a business. It can also refer to the net worth (or book value) of a business. Capital most commonly refers to the money used by a business either to meet upcoming expenses, or to invest in new assets and projects.'>Capital<\/abbr> Gain Tax \u00a7 Inheritance Tax \u00a7 Stamp Duties (Land &amp; Marketable Securities) \u00a7 Council Tax<\/p>\n\n\n\n<p><strong>Income Tax rates and Personal Allowances<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Current rates and allowances<\/h2>\n\n\n\n<p>How much Income Tax you pay in each tax year depends on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>how much of your income is above your Personal Allowance<\/li><li>how much of your income falls within each tax band<\/li><\/ul>\n\n\n\n<p>Some income is&nbsp;<a href=\"https:\/\/www.gov.uk\/income-tax\">tax-free<\/a>.<\/p>\n\n\n\n<p>The current tax year is from 6 April 2020 to 5 April 2021.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"your-tax-free-personal-allowance\">Your tax-free Personal Allowance<\/h2>\n\n\n\n<p>The standard Personal Allowance is \u00a312,500, which is the amount of income you do not have to pay tax on.<\/p>\n\n\n\n<p>Your Personal Allowance may be bigger if you claim&nbsp;<a href=\"https:\/\/www.gov.uk\/marriage-allowance\">Marriage Allowance<\/a>&nbsp;or&nbsp;<a href=\"https:\/\/www.gov.uk\/blind-persons-allowance\">Blind Person\u2019s Allowance<\/a>. It\u2019s smaller if your&nbsp;<a href=\"https:\/\/www.gov.uk\/income-tax-rates\/income-over-100000\">income is over \u00a3100,000<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"income-tax-rates-and-bands\">Income Tax rates and bands<\/h2>\n\n\n\n<p>The table shows the tax rates you pay in each band if you have a standard Personal Allowance of \u00a312,500.<\/p>\n\n\n\n<p>Income tax bands are different&nbsp;<a href=\"https:\/\/www.gov.uk\/scottish-rate-income-tax\/how-it-works\">if you live in Scotland<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th scope=\"col\">Band<\/th><th scope=\"col\">Taxable income<\/th><th scope=\"col\">Tax rate<\/th><\/tr><\/thead><tbody><tr><td>Personal Allowance<\/td><td>Up to \u00a312,500<\/td><td>0%<\/td><\/tr><tr><td>Basic rate<\/td><td>\u00a312,501 to \u00a350,000<\/td><td>20%<\/td><\/tr><tr><td>Higher rate<\/td><td>\u00a350,001 to \u00a3150,000<\/td><td>40%<\/td><\/tr><tr><td>Additional rate<\/td><td>over \u00a3150,000<\/td><td>45%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>You can also see the&nbsp;<a href=\"https:\/\/www.gov.uk\/government\/publications\/rates-and-allowances-income-tax\/income-tax-rates-and-allowances-current-and-past#tax-rates-and-bands\">rates and bands without the Personal Allowance<\/a>. You do not get a Personal Allowance on taxable income over \u00a3125,000.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"if-youre-employed-or-get-a-pension\">If you\u2019re employed or get a pension<\/h3>\n\n\n\n<p><a href=\"https:\/\/www.gov.uk\/check-income-tax-current-year\">Check your Income Tax<\/a>&nbsp;to see:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>your Personal Allowance and tax code<\/li><li>how much tax you\u2019ve paid in the current tax year<\/li><li>how much you\u2019re likely to pay for the rest of the year<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"other-allowances\">Other allowances<\/h2>\n\n\n\n<p>You have tax-free allowances for:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/www.gov.uk\/apply-tax-free-interest-on-savings\">savings interest<\/a><\/li><li><a href=\"https:\/\/www.gov.uk\/tax-on-dividends\">dividends<\/a>, if you own shares in a company<\/li><\/ul>\n\n\n\n<p>You may also have tax-free allowances for:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>your first \u00a31,000 of income from&nbsp;<a href=\"https:\/\/www.gov.uk\/working-for-yourself\">self-employment<\/a>&nbsp;&#8211; this is your \u2018trading allowance\u2019<\/li><li>your first \u00a31,000 of income from&nbsp;<a href=\"https:\/\/www.gov.uk\/renting-out-a-property\/paying-tax\">property you rent<\/a>&nbsp;(unless you\u2019re using the&nbsp;<a href=\"https:\/\/www.gov.uk\/rent-room-in-your-home\/the-rent-a-room-scheme\">Rent a Room Scheme<\/a>)<\/li><\/ul>\n\n\n\n<p>Find out whether you\u2019re eligible for the&nbsp;<a href=\"https:\/\/www.gov.uk\/guidance\/tax-free-allowances-on-property-and-trading-income\">trading and property allowances<\/a>.<\/p>\n\n\n\n<p>You pay tax on any interest, dividends or income over your allowances.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"paying-less-income-tax\">Paying less Income Tax<\/h2>\n\n\n\n<p>You may be able to claim&nbsp;<a href=\"https:\/\/www.gov.uk\/income-tax-reliefs\">Income Tax reliefs<\/a>&nbsp;if you\u2019re eligible for them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"if-youre-married-or-in-a-civil-partnership\">If you\u2019re married or in a civil partnership<\/h3>\n\n\n\n<p>You may be able to&nbsp;<a href=\"https:\/\/www.gov.uk\/marriage-allowance\">claim Marriage Allowance<\/a>&nbsp;to reduce your partner\u2019s tax if your income is less than the standard Personal Allowance.<\/p>\n\n\n\n<p>If you do not claim Marriage Allowance and you or your partner were born before 6 April 1935, you may be able to claim\u00a0<a href=\"https:\/\/www.gov.uk\/married-couples-allowance\">Married Couple\u2019s Allowance<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Tax on savings interest<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">How much tax you pay<\/h3>\n\n\n\n<p>Most people can earn some interest from their savings without paying tax.<\/p>\n\n\n\n<p>Your allowances for earning interest before you have to pay tax on it include:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>your Personal Allowance<\/li><li>starting rate for savings<\/li><li>Personal Savings Allowance<\/li><\/ul>\n\n\n\n<p>You get these allowances each tax year. How much you get depends on your other income. The tax year runs from 6 April to 5 April the following year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"personal-allowance\">Personal Allowance<\/h3>\n\n\n\n<p>You can use your&nbsp;<a href=\"https:\/\/www.gov.uk\/income-tax-rates\">Personal Allowance<\/a>&nbsp;to earn interest tax-free if you have not used it up on your wages, pension or other income.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"starting-rate-for-savings\">Starting rate for savings<\/h3>\n\n\n\n<p>You may also get up to \u00a35,000 of interest and not have to pay tax on it. This is your starting rate for savings.<\/p>\n\n\n\n<p>The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"if-your-other-income-is-17500-or-more\">If your other income is \u00a317,500 or more<\/h3>\n\n\n\n<p>You\u2019re not eligible for the starting rate for savings if your other income is \u00a317,500 or more.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"if-your-other-income-is-less-than-17500\">If your other income is less than \u00a317,500<\/h3>\n\n\n\n<p>Your starting rate for savings is a maximum of \u00a35,000. Every \u00a31 of other income above your Personal Allowance reduces your starting rate for savings by \u00a31.<\/p>\n\n\n\n<p><strong>Example<\/strong>You earn \u00a316,000 of wages and get \u00a3200 interest on your savings.<\/p>\n\n\n\n<p>Your Personal Allowance is \u00a312,500. It\u2019s used up by the first \u00a312,500 of your wages.<\/p>\n\n\n\n<p>The remaining \u00a33,500 of your wages (\u00a316,000 minus \u00a312,500) reduces your starting rate for savings by \u00a33,500.<\/p>\n\n\n\n<p>Your remaining starting rate for savings is \u00a31,500 (\u00a35,000 minus \u00a33,500). This means you will not have to pay tax on your \u00a3200 savings interest.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"personal-savings-allowance\">Personal Savings Allowance<\/h2>\n\n\n\n<p>You may also get up to \u00a31,000 of interest and not have to pay tax on it, depending on which&nbsp;<a href=\"https:\/\/www.gov.uk\/government\/publications\/rates-and-allowances-income-tax\/income-tax-rates-and-allowances-current-and-past#tax-rates-and-bands\">Income Tax band<\/a>&nbsp;you\u2019re in. This is your Personal Savings Allowance.<\/p>\n\n\n\n<p>To work out your tax band, add all the interest you\u2019ve received to your other income.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th scope=\"col\">Income Tax band<\/th><th scope=\"col\">Personal Savings Allowance<\/th><\/tr><\/thead><tbody><tr><td>Basic rate<\/td><td>\u00a31,000<\/td><\/tr><tr><td>Higher rate<\/td><td>\u00a3500<\/td><\/tr><tr><td>Additional rate<\/td><td>\u00a30<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"interest-covered-by-your-allowance\">Interest covered by your allowance<\/h3>\n\n\n\n<p>Your allowance applies to interest from:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>bank and building society accounts<\/li><li>savings and <abbr class='c2c-text-hover' title='\u2018place on the right of the account called\u2019. It can mean either increasing or decreasing for different accounts'>credit<\/abbr> union accounts<\/li><li>unit trusts, investment trusts and open-ended investment companies<\/li><li>peer-to-peer lending<\/li><li>trust funds<\/li><li>payment protection insurance (PPI)<\/li><li>government or company bonds<\/li><li>life annuity payments<\/li><li>some life insurance contracts<\/li><\/ul>\n\n\n\n<p>Savings in tax-free accounts like&nbsp;<a href=\"https:\/\/www.gov.uk\/individual-savings-accounts\">Individual Savings Accounts<\/a>&nbsp;(ISAs) and some&nbsp;<a href=\"http:\/\/www.nsandi.com\/\">National Savings and Investments<\/a>&nbsp;accounts do not count towards your allowance.<\/p>\n\n\n\n<p>There are different rules for tax on&nbsp;<a href=\"https:\/\/www.gov.uk\/tax-foreign-income\">foreign savings<\/a>&nbsp;and&nbsp;<a href=\"https:\/\/www.gov.uk\/savings-for-children\">children\u2019s accounts<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"interest-on-joint-accounts\">Interest on joint accounts<\/h3>\n\n\n\n<p>If you have a joint <abbr class='c2c-text-hover' title='Part of double entry records, containing details of transactions for a specific item.'>account<\/abbr>, interest will be split equally between the <abbr class='c2c-text-hover' title='Part of double entry records, containing details of transactions for a specific item.'>account<\/abbr> holders. Contact the&nbsp;<a href=\"https:\/\/www.gov.uk\/government\/organisations\/hm-revenue-customs\/contact\/register-to-receive-bank-and-building-society-interest-without-tax-taken-off\">savings helpline<\/a>&nbsp;if you think it should be split differently.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"if-you-go-over-your-allowance\">If you go over your allowance<\/h3>\n\n\n\n<p>You pay tax on any interest over your allowance at your&nbsp;<a href=\"https:\/\/www.gov.uk\/income-tax-rates\">usual rate of Income Tax<\/a>.<\/p>\n\n\n\n<p>If you\u2019re employed or get a pension,&nbsp;HMRC&nbsp;will change your tax code so you pay the tax automatically. To decide your tax code,&nbsp;HMRC&nbsp;will estimate how much interest you\u2019ll get in the current year by looking at how much you got the previous year.<\/p>\n\n\n\n<p>If you complete a&nbsp;<a href=\"https:\/\/www.gov.uk\/self-assessment-tax-returns\/overview\">Self Assessment tax return<\/a>, report any interest earned on savings there.<\/p>\n\n\n\n<p>You need to register for Self Assessment if your income from savings and investments is over \u00a310,000.&nbsp;<a href=\"https:\/\/www.gov.uk\/check-if-you-need-tax-return\">Check if you need to send a tax return<\/a>&nbsp;if you\u2019re not sure.<\/p>\n\n\n\n<p>If you\u2019re not employed, do not get a pension or do not complete Self Assessment, your bank or building society will tell&nbsp;HMRC&nbsp;how much interest you received at the end of the year.&nbsp;HMRC&nbsp;will tell you if you need to pay tax and how to pay it.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"if-you-already-paid-tax-on-your-savings-income\">If you already paid tax on your savings income<\/h3>\n\n\n\n<p>You can reclaim tax paid on your savings interest if it was below your allowance. You must reclaim your tax within 4 years of the end of the relevant tax year.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.gov.uk\/government\/publications\/income-tax-claim-for-repayment-of-tax-deducted-from-savings-and-investments-r40\">Fill in form R40<\/a>&nbsp;and send it to&nbsp;HMRC. It normally takes 6 weeks to get the tax back.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Further Reading<\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/www.gov.uk\/income-tax-rates\">https:\/\/www.gov.uk\/income-tax-rates<\/a><\/li><li><a href=\"https:\/\/www.gov.uk\/apply-tax-free-interest-on-savings\">https:\/\/www.gov.uk\/apply-tax-free-interest-on-savings<\/a><\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Types of Tax \u00a7Income Tax (Income, Dividends, Savings, Other) \u00a7 National Insurance Contributions \u00a7 <abbr class='c2c-text-hover' title='is anything that increases one\u2019s ability to generate value. It can be used to increase value across a wide range of categories, such as financial, social, physical, intellectual, etc. In business and economics, the two most common types of capital are financial and human. Capital is the money used to build, run, or grow a business. It can also refer to the net worth (or book value) of a business. Capital most commonly refers to the money used by a business either to meet upcoming expenses, or to invest in new assets and projects.'>Capital<\/abbr> Gain Tax \u00a7 Inheritance Tax \u00a7 Stamp Duties (Land &amp; Marketable Securities) \u00a7 Council Tax Income Tax rates and Personal Allowances Current rates and allowances <a href=\"https:\/\/thefinancialeducation.co.uk\/index.php\/2020\/05\/14\/personal-tax-uk\/\" class=\"read-more\">Read More &#8230;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_uag_custom_page_level_css":"","footnotes":""},"categories":[19],"tags":[],"table_tags":[],"class_list":["post-785","post","type-post","status-publish","format-standard","hentry","category-405af"],"featured_image_src":null,"author_info":{"display_name":"admin","author_link":"https:\/\/thefinancialeducation.co.uk\/index.php\/author\/admin\/"},"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"education-hub-thumb":false},"uagb_author_info":{"display_name":"admin","author_link":"https:\/\/thefinancialeducation.co.uk\/index.php\/author\/admin\/"},"uagb_comment_info":1,"uagb_excerpt":"Types of Tax \u00a7Income Tax (Income, Dividends, Savings, Other) \u00a7 National Insurance Contributions \u00a7 Capital Gain Tax \u00a7 Inheritance Tax \u00a7 Stamp Duties (Land &amp; Marketable Securities) \u00a7 Council Tax Income Tax rates and Personal Allowances Current rates and allowances Read More ...","_links":{"self":[{"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=785"}],"version-history":[{"count":9,"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/785\/revisions"}],"predecessor-version":[{"id":798,"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/785\/revisions\/798"}],"wp:attachment":[{"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=785"},{"taxonomy":"table_tags","embeddable":true,"href":"https:\/\/thefinancialeducation.co.uk\/index.php\/wp-json\/wp\/v2\/table_tags?post=785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}