Personal allowance is the threshold under which the income of an individual is not taxable. If the income of an individual resides below Personal allowance limit, no tax is levied on that person. Personal allowance limit for current year is eleven thousand pounds.
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Income taxation system developed in United Kingdom in based on the fact that all incomes earned by the individual through the means of follows:
Following are the details of the exempt or limited taxable sources of income:
Personal allowance is the threshold under which the income of an individual is not taxable. If the income of an individual resides below Personal allowance limit, no tax is levied on that person. Personal allowance limit for current year is eleven thousand pounds. If the income exceeds the personal allowance limit, only the portion of the income which is exceeding the personal allowance limit will be taxable income for the individual for the tax year. For every 2 pound over 100,000 pounds 1 pound of the personal allowance is lost.
Personal allowance slab:
This is the exempt income slab; any income falling in this category will not be taxed
Up till the income of 43,000 pounds, any income over the personal allowance is charged with 20% on whatever an individual earns from his entire source of incomes.
Taxation system in United Kingdom is resident based taxation system which means the income of residents of United Kingdom from all the sources worldwide will be taxed unlike various countries which follow territory taxation system and the income earned from the geographical territory of the business is taxed. United Kingdom has various double taxation treaties with various countries to prevent double taxation from the income earned from the outside of the country.
As the tax legislations are getting more and more sophisticated and law makers are getting smarter and smarter. Legal tax planning is becoming more and more difficult and a professional advice from tax return accountants in Londonis becoming a basic necessity.
Tax specialists are more aware of the law and their potential loopholes which can help the individuals save tax in the legal way. United Kingdom is considered in one of the highest taxation system in the world.
Proper tax planning can save a lot of money for the individuals who are liable to pay their taxes in United Kingdom.
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