Is that Income Taxable? By Kellie Knight of Knight Accountants

moneyWith so many different income streams, it can be very hard to know what is taxable, and therefore needs to be declared.  Below is a list from accountant Kellie Knight

 TAXABLE INCOME

Income from employment

This Includes income from full, part-time and temporary employment, and if you get any benefits from your employer these may also be taxable.

Income from self employment/partnerships

Profits you make from working for yourself as a sole trader or partner.  This income will generally need to be recorded with a set of financial statements.

Pension income

This includes, State Pension, Personal or company pensions and Retirement annuity.

Interest on savings

This includes Bank and building society interest (however, Individual Savings
Accounts (ISAs) are exempt), and National Savings and Investments accounts and bonds.

Investment income

Dividends on company shares (however, dividend income from ISAs is exempt)

State benefits

The most common taxable state benefits are:

Carer’s Allowance, Jobseeker’s Allowance, Employment and Support Allowance – ‘contribution’ based (if you have paid enough National Insurance contributions), Incapacity Benefit – from week 29, Weekly Bereavement Allowance

Rental income

This can be in the form of a lodger in your only or family home if you receive more than £4,250 a year (£2,125 if split jointly), or from a second property. The taxable profit is after allowable expenses and any mortgage interest.

 NON TAXABLE INCOME

State benefits

The most common non-taxable state benefits are:

Disability Living Allowance, Attendance Allowance, Lump sum Bereavement Payments, Pension Credit, Free TV licence for over 75s, Winter Fuel Payments and Christmas Bonus, Housing Benefit, Employment and Support Allowance – income based (if you haven’t paid enough National Insurance contributions), Income Support – certain payments, Child Benefit, Guardian’s Allowance, Maternity Allowance, Industrial Injuries Benefit, Severe Disablement Allowance, War Widow’s Pension, Young Person’s Bridging Allowance.

Interest on savings

This includes All ISAs, and Savings Certificates.

Rents

The first £4,250 a year from a lodger in your only or family home – £2,125 if split jointly.

Tax Credits

This includes both Working Tax Credit, and Child Tax Credit.

Premium Bonds

Wins from Premium Bonds are free from UK Income Tax and Capital Gains Tax.

WHAT TO DO NEXT

If you do have any of the taxable income as listed above, you will need to declare this to HMRC, possibly over the phone, or more likely via a Self Assessment Tax Return.

Kellie KnightIf you would like any further advice in this area, why not Knight Accountants and one of our qualified, experienced team will be more than happy to assist you. We are an award winning family run firm, specialising in small business and service charge accounts.  We are based in Hastings, East Sussex offering affordable fixed fees to all.

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