The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
The proforma for calculating an individual’s tax liability is very important. The method for arriving at the tax due is set out step by step in ITA 2007, s 23. This is illustrated in the attached proforma and is explained in words below.
Computation of total income (Step 1)
Firstly, it is necessary to identify the amount(s) of income on which the individual is taxable in the tax year, using the rules applicable for each source of income. Each type of income is a component of the total tax liability.
* These sources of income are collectively known as non-savings income for the purpose of calculating the tax liability. ‘Non-savings income’ is income which is not savings income or dividend income.
Remember, where tax has been deducted at source (eg on salary) it is the gross amount of the income that is included in the income tax computation.
Foreign income tends to be taxed in the same way as its source. For example, foreign bank interest is taxable as savings income and foreign pension income is taxable as pension income. The exception to this is where the taxpayer has accessed the remittance basis of assessment, in which case he is only taxable on the foreign income which he remits (brings) to the UK in the tax year and this remitted income is treated as non-savings income. See the Remittance basis ― overview guidance note for more
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