TAX LAW

Tax Law

Tax Law

Answer to Question 1, Part 1:

The word tax refers to levy imposed or the financial charge that is imposed to a tax payer by the state or something that is equivalent to state and that failure to pay this imposed tax is liable to be punished by the law as it is a mandatory act to fulfill (Andersson, 1998, p.327). When it comes to asking that who is taxed and who is not and when they should be taxed have several answers. Broadly speaking, the United Kingdom (UK) has its own rules to tax as compared to other countries in the world and charges tax on income that is coming from outside of UK and belongs to the residents living in UK. Secondly, income that is coming from within the country i.e. UK and may or may not belong to the residents residing in UK. Thirdly, the tax is also imposed on the gains being accrued from the disposal of assets from around the world which belong to the ordinary residents or people residents staying in UK. In some circumstances, special rules are applied but mostly the income tax is paid depending on whether one is ordinarily resident or resident in the UK.

Answer to Question 1, Part 2:

Taxable income is the income that is above our personal allowance and are liable to pay such income tax on: profits that we earn if we are self employed, income that we earn from work whether it is full time, half time or jobs that are temporary, company shares and the dividends gained from it, pensions whether it maybe state or retirement pension (Bond, 1996, p.1). Other taxable incomes include income from a trust and the pensioner bonds.

Income tax rate on the contrary explains the burden ratio at which a person or business is taxed. There are many methods to present this tax rate such as marginal, statutory, effective and average. The starting rate of 10% is applied to savings income.

If personal allowance is deducted from our total income which is accountable to income tax and our non saving income is above the limit, then in this case, then the starting rate i.e. 10% is not applied. Non saving income consists of pensions, income from employment, income earned from property etc.

Answer to Q1, Part 3:

For purposes like income tax, the relevant period for tax was set out in the year 2005, s 324. The “relevant tax period' can be determined by many factors like: if the accommodation by any person was used as furnished accommodation in the last year but was not used as a furnished accommodation by the same person next year, then the relevant tax period will be a 12 month period which will end with the last day as a part of the tax year on which it was utilized by the person as part of the accommodation that is furnished. Secondly, if the furnished accommodation was not let by the person ...