roguetrader
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Hi Ketank, as you've no doubt seen from looking around, it's a complicated subject, and a large one. You'd be better asking what it is you are unsure about. You can contact your local inland revenue office, they will give you free advice, or enlist the services of a chartered accountant, depends really on how complicated your situation is.ketank said:
Thanks roguetrader,
here's a bit more infor.....
This is were I'm lost.......... I know we have a Personal allowance: £8,500
This is the amount of tax-free profit an individual can accrue.
here what i dont understand::::::
Above this figure, profits are taxed as if they were your top slice of income. If you have no other income then you will pay:
10% on the next £2090
20% on the next £30,310
40% above £32,400.
From what i understood (which I'm sure is wrong) you can make £8500 profit tax free anything after that you pay tax but I'm lost for what the italic bit means.
here's a bit more infor.....
This is were I'm lost.......... I know we have a Personal allowance: £8,500
This is the amount of tax-free profit an individual can accrue.
here what i dont understand::::::
Above this figure, profits are taxed as if they were your top slice of income. If you have no other income then you will pay:
10% on the next £2090
20% on the next £30,310
40% above £32,400.
From what i understood (which I'm sure is wrong) you can make £8500 profit tax free anything after that you pay tax but I'm lost for what the italic bit means.
frugi
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Perhaps an example would help.
Imagine you earn no income from other sources.
You buy shares for £5000 and sell them for £25000.
Your profit is £20000.
£8500 of this is tax free which leaves £11500 taxable gain.
So you pay 10% on £2090 of this
and 20% on the remaining £9410.
Total tax is thus £2091.
However now imagine you earn £25000 a year. (Ignore personal allowance here)
Again £8500 of your £20000 profit is tax free, which leaves £11500 taxable gain.
But as you already earned £25000 the £11500 is now "stuck on top" of this figure.
So you pay 20% on £7400 and 40% on £4100.
£25000 + £11500 = £36500
It's 40% above £32400 so you pay 40% on (£36500 - £32400) = £4100
This leaves £7400 which is taxed at 20% as you have already earned more than £2090 with your other income.
Sorry for a poor example. But at least it spares you the joys of indexation and taper relief.
Imagine you earn no income from other sources.
You buy shares for £5000 and sell them for £25000.
Your profit is £20000.
£8500 of this is tax free which leaves £11500 taxable gain.
So you pay 10% on £2090 of this
and 20% on the remaining £9410.
Total tax is thus £2091.
However now imagine you earn £25000 a year. (Ignore personal allowance here)
Again £8500 of your £20000 profit is tax free, which leaves £11500 taxable gain.
But as you already earned £25000 the £11500 is now "stuck on top" of this figure.
So you pay 20% on £7400 and 40% on £4100.
£25000 + £11500 = £36500
It's 40% above £32400 so you pay 40% on (£36500 - £32400) = £4100
This leaves £7400 which is taxed at 20% as you have already earned more than £2090 with your other income.
Sorry for a poor example. But at least it spares you the joys of indexation and taper relief.
roguetrader
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You can complete a self assessment online, information hereketank said:
http://www.hmrc.gov.uk/individuals/iwtfile-a-self-assessment-tax-return-online.shtml
Provided you submit your returns at the appropriate time it is not necessary for you to do any calculations, other than to compare what the tax-man charges with your own calculation.