Tax Glossary
Welcome to the our Tax Glossary. To help you interpret the jargon that you can come across in dealing with your tax, our team of experts have written a brief explanation for hundreds of technical terms. Click on a letter to show entries.
Redundancy Payments
Payments made to an individual who has been continuously employed for 2 years or more and their employment has been terminated as the job no longer exists. These can include pay in lieu and golden handshakes. The amounts are chargeable to income tax above the statutory limit of £30,000. Only one limit applies per annum.
Payments made to an individual who has been continuously employed for 2 years or more and their employment has been terminated as the job no longer exists. These can include pay in lieu and golden handshakes. The amounts are chargeable to income tax above the statutory limit of £30,000. Only one limit applies per annum.
Remittance Basis
Tax is usually payable by UK residents on worldwide income. This does not always apply to individuals classed as not domiciled here. In these cases, tax is only due on foreign income when it is actually brought into the UK. With effect from 6 April 2008 individuals who are taxed on a remittance basis will in general lose entitlement to personal allowances and capital gains tax annual exemption. This is subject to a de minimis level of £2000. Those choosing to be taxed on this basis and who have been UK resident for longer than 7 of the past 10 years will be required to pay a £30000 charge.
Tax is usually payable by UK residents on worldwide income. This does not always apply to individuals classed as not domiciled here. In these cases, tax is only due on foreign income when it is actually brought into the UK. With effect from 6 April 2008 individuals who are taxed on a remittance basis will in general lose entitlement to personal allowances and capital gains tax annual exemption. This is subject to a de minimis level of £2000. Those choosing to be taxed on this basis and who have been UK resident for longer than 7 of the past 10 years will be required to pay a £30000 charge.
Rent A Room Scheme
Rents received from letting furnished accommodation in your only or main residence are exempt from tax subject to a maximum limit of £4250 per year. If rents received exceed this amount tax is paid on: Gross rents less expenses; OR The amount by which the rents exceed the maximum, without deducting expenses If the income is received jointly, the exemption is split.
Rents received from letting furnished accommodation in your only or main residence are exempt from tax subject to a maximum limit of £4250 per year. If rents received exceed this amount tax is paid on: Gross rents less expenses; OR The amount by which the rents exceed the maximum, without deducting expenses If the income is received jointly, the exemption is split.
Rental Expenses
Rental expenses fall into two categories.
Revenue expenses:Ongoing expenses incurred in the rental of a property are deducted from the annual rental income to arrive at the profit. They may include letting agents' fees, house insurance etc.
Capital Expenses:These are expenses on the fabric of the property. For instance, an extension to a house, or new wiring etc. increasing the value of the property. Such expenses can only be claimed against any future capital gains tax.
Rental expenses fall into two categories.
Revenue expenses:Ongoing expenses incurred in the rental of a property are deducted from the annual rental income to arrive at the profit. They may include letting agents' fees, house insurance etc.
Capital Expenses:These are expenses on the fabric of the property. For instance, an extension to a house, or new wiring etc. increasing the value of the property. Such expenses can only be claimed against any future capital gains tax.
Rental Income
Income from UK land and property which is taxable as investment income, except for Furnished Holiday Lettings which is treated as trading income.
Income from UK land and property which is taxable as investment income, except for Furnished Holiday Lettings which is treated as trading income.
Residence
In UK tax, your residence is where you are classed as living in any particular year. If this is the UK, it is likely that you will be taxed on all your worldwide income.
A person is definitely classed as resident in the UK if more than 183 days were spent here in a particular year, or more than 90 days were spent here on average over a 4 year period. Up to 5 April 2008 days of arrival and departure were not counted for this purpose. However from 6 April 2008 any day where you are present in the UK at midnight will be counted as a day of presence in the UK for residence purposes.
In UK tax, your residence is where you are classed as living in any particular year. If this is the UK, it is likely that you will be taxed on all your worldwide income.
A person is definitely classed as resident in the UK if more than 183 days were spent here in a particular year, or more than 90 days were spent here on average over a 4 year period. Up to 5 April 2008 days of arrival and departure were not counted for this purpose. However from 6 April 2008 any day where you are present in the UK at midnight will be counted as a day of presence in the UK for residence purposes.
Retirement Annuity Payments
Retirement Annuity Schemes are a type of personal pension scheme that was phased out in July 1988. Since then, no new contracts have been created, although contributions to existing agreements have still been possible.
The payments made are allowable for tax purposes, although there is a limit on the amount that can be paid into a scheme each year.
Finally, unlike personal pension scheme contributions, no tax relief is given at source. It must always be claimed separately.
Retirement Annuity Schemes are a type of personal pension scheme that was phased out in July 1988. Since then, no new contracts have been created, although contributions to existing agreements have still been possible.
The payments made are allowable for tax purposes, although there is a limit on the amount that can be paid into a scheme each year.
Finally, unlike personal pension scheme contributions, no tax relief is given at source. It must always be claimed separately.
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