1. Taxation in the UK JA Stenning Taxation in the UK Unit 6: Fiscal Policy

2. Taxation in the UK JA Stenning Income Tax ‘Income’ includes earnings from employment / self employment. Includes income from pensions, shares and interest on savings. Income tax allowance is £4,895 (unless you’re blind)

3. Taxation in the UK JA Stenning Income Tax Rates Income Tax bands for 2005 – 2006: 1.10% on taxable income up to £2,090. 2.22% between £2,091 and £32,400. 3.40% over £32, 401.

4. Taxation in the UK JA Stenning Income Tax: An illustration Income before tax: £60,000 Allowances: Personal: £4895 Pension: £5105 Total: £10,000 Taxable Income: £50,000.00 £2,090 @ 10%£209.00 £30,310@ 22%£6,668.20 £17,600 @ 40%£7040.00 Total:£13,917.20 Income after tax: £46,082.00

5. Taxation in the UK JA Stenning Income Tax: PAYE Your employer will normally deduct income tax from you wages and send it to HMRC. This is called Pay As You Earn (PAYE)

6. Taxation in the UK JA Stenning National Insurance One pays this to build up entitlements to a state pension and other benefits. You and your employer pay a certain percentage of your wages as NIC’s.

7. Taxation in the UK JA Stenning Stamp Duty The tax you pay when you buy property or shares. The amount you pay depends on the value of your property: £0 - £120,000: 0% £120,001 - £250,000: 1% £250,001 - £500,000: 3% £500,001 + : 4%

8. Taxation in the UK JA Stenning Stamp Duty and Shares You pay tax at a rate of 0.5% when you buy shares.

9. Taxation in the UK JA Stenning VAT The tax you pay as a consumer when you buy goods and services. In the UK the standard rate on most goods is 17.5%. Some commodities are “0 – rated”

10. Taxation in the UK JA Stenning Capital Gains Tax A tax on capital ‘gains’ – the difference between a buying price and selling price of an asset. Paid mainly on stocks and shares. If, when you give away an asset or it has increased in value, you me be taxed on the gain (profit) Doesn’t apply on personal belongings worth less than £6000 Doesn’t apply to houses.

11. Taxation in the UK JA Stenning Council Tax Set by local councils to help pay for local services. There is one council tax bill for each home. Each property assessed for sale value in 1992 and property then put into one of 7 bands. Local Authority then fixes a price for each band.