Personal Tax

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Tax Bands for 2019/20 and 2020/21

Tax Bands for 2019/20 and 2020/21

Your residency of your main home affects whether your tax is calculated by the different band brackets. If you moved country during the tax year, the country in which you spent the majority of your year in a main home determines your residency and which tax band to use. Many figures from the 2019/20 have not changed for the 2020/21 tax year; the overall changes appear to be made to the starter and basic rates of tax.

UK Residency Tests
If a UK resident receives foreign income then it is likely that the income will be taxed in the foreign country before being paid to that individual, and again when the individual declares the income to HMRC. The UK has treaty agreements with some overseas countries, in which UK residents can claim tax relief if their foreign income is subjected to tax twice.
Foster Caring
To foster a child is different than to adopt a child; the child will stay with the foster family for a duration of time as required, and while the foster family may be responsible for the child’s well-being while they are within their home, the legal rights of the child are still with the birth parents. There will often be a plan for the child’s future and for the child to return to its birth family but sometimes fostering can lead to adoption.
Tax on the Sale of Assets
When a sole trader or a partnership sell a business asset, such as machinery or a building, the calculation of tax to be paid on the profits is calculated via the Capital Gains Tax pages less than reliefs that the sale of the asset is entitled to. Limited Companies pay Corporation Tax on the profits of the sale of an asset alongside the profits of the business’ trading. Relief on the corporation tax payable can be claimed if there are losses being brought forward from previous accounting periods, or if the company’s production and transaction meet any requirements for specific relief.
Residential Landlords and the Rent a Room Scheme
If a homeowner rents out a room in their main home to a tenant or lodger, they will be required to complete a self-assessment tax return and may have to pay additional income tax on the rental profits made from the tenancy. If there are two partners renting out the room the income is shared between them equally, and each must prepare a tax return. Before agreeing a tenancy it is ideal for a homeowner to ask for references on the potential tenants and lodgers and to follow up on these, and to be fully aware of the guidelines on letting out a room in a main home.


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