Tax on certain types of transaction

MONEY, TAX AND BENEFITS

Beginner's guide to tax

HM Revenue & Customs collects tax to pay for public services. Each year the Chancellor's Budget sets out how much it'll cost to provide these services and how much tax is needed to pay for them. Key taxes that individuals may have to pay include: Income Tax, Capital Gains Tax, Inheritance Tax, Stamp Duty, Value Added Tax and certain other duties.

The different types of tax

Income Tax on earnings, pensions and benefits

You pay Income Tax on:

· your wages if you're employed

· the profits from your business if you're self-employed

· your State Pension and any company or private pensions

· some benefits like Jobseeker's Allowance, Carer's Allowance and Incapacity Benefit

As well as paying Income Tax on your wages and on income from self-employment, you also have to pay National Insurance contributions (NICs).

If you're an employee, your employer operates PAYE (Pay As You Earn) and deducts tax and NICs from your wages. If you're self-employed you'll be responsible for paying your own tax and NICs and filling in your Self Assessment tax return.

Income Tax on savings and investments

You pay Income Tax on most of the income you get from your savings and investments. This includes:

· bank and building society interest

· dividends from shares

· rents from any investment properties you own

Bank and building society interest and dividends are usually 'taxed at source' (meaning tax is deducted before they're paid to you).

Tax on certain types of transaction

You may have to pay tax when you buy or sell things or give them away, for example:

· Capital Gains Tax if you sell or give away assets

· Stamp Duty when you buy property or shares

· Inheritance Tax on your estate when you die, including some gifts made up to seven years beforehand

For more information on these taxes and the different ways you pay them follow the links below.

Date: 2015-01-29; view: 861