- Personal allowances are deducted from your income before calculating IT at rates that are determined by the level of your income. You qualify for the married couple’s/civil partner’s allowance only if at least one of you was born before 6 April 1935. Relief for these allowances is restricted to 10%.
- The age allowances above the basic single personal and married couple’s allowance are reduced by £1 for every £2 to the extent that your total income is more than the age allowance threshold.
- Your personal allowance is reduced by £1 for each £2 of income over £100,000, so was completely lost if your 2010/11 income exceeded £112,950.
- The family element of children’s tax credit is paid directly to the main carer and is not an income tax deduction.
Married couples
Spouses and partners are independently subject to IT, with their own allowances and rates. If you hold shares in a close company jointly with your spouse/partner, the dividends are allocated between you according to your respective interests in the shares. Income from your other jointly held assets is generally divided equally, except where the actual division of ownership is unequal and you have asked for this split to be the basis for taxing your income.
Self-employment
Tax is normally charged on the profits you have earned in an accounting period. Deductions can be made against gross income for your expenses that you have wholly and exclusively incurred for business purposes.
See also Self-employment.
Partnership
Profits from a business are divided between the partners, who are taxed personally on their profit share on the same basis as self-employed individuals. Partners must include their profit share on their tax returns, and the partnership must also complete a return.
See also Partnership Tax.Last Updated
