Everyone who earns an income is liable to pay a tax to the government to support publicly provided services. The level of tax that you pay is dependent on your income within the tax year (April to March).
Rates of tax (at what rate you must pay tax) and tax bands (each level of income has a different tax rate) for 2000/2001. These bands refer to the tax payable after you have used your individual tax free allowance (each person is allowed a certain amount of income before they must start paying tax). This is determined by your allocated tax code which is based on your personal circumstances like marital status or Benefits in Kind from your employer.
Each individual has an amount of money they are able to earn without being liable to tax on the income. The bandings shown below show the tax payable on your income after your initial tax free allowance is used.
Starting rate - 10%£0 - £1,520Basic rate - 22%£1,521 - £28,400Higher rate - 40%over £28,400
Capital Gains Tax
Capital Gains Tax is potentially payable on the sale or disposal of assets if the price at which you sold the asset is more than you paid for it. You are liable to tax on the gain made when you sell, however each individual has certain allowances. (Gains that can be made without paying tax are currently £7200).
Examples of assets that are liable to CGT
Stocks and Shares
Land and buildings
Business assets such as goodwill
Capital Gains Tax is calculated by adding your capital gain to your total income and charging tax at your marginal rate of 10%, 22%, or 40%.
Inheritance Tax
Inheritance tax is payable on your estate (all your assets added up) when you die. The tax affects your assets and what you may leave behind for your children or loved ones. It is payable when the value of the estate exceeds £234, 000. 40% of the value of everything above this figure is paid to the government in the form of Inheritance tax. There is no liability to inheritance tax between husband and wife.
