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Taxable or Not?

TAXABLE INCOME

NON TAXABLE INCOME

Bear in mind that this list is not exhaustive and may not include all items of taxable income. Some items may have conditions that apply to them

This table is for reference only and you should take professional advice before acting on any information included on this site

Reliefs, Benefits and Allowances interact with each other which may mean that any one solution may not fit all circumstances.

Not all income is taxable. You can also receive normally ‘taxable’ income ‘tax free’ because of allowances and reliefs available to you.

Many non-taxable items are subject to conditions which must be satisfied. This table is for reference only and you should take professional advice before acting on any information included on this site

Work related

 

Income from office or employment(usually shown on your P60 or P45 but not always)– it doesn’t matter whether this is full time, part time, temporary or casual. This includes wages and salaries, commission, bonuses, tips and certain foreign earnings

Certain earnings when working abroad

Strike pay and unemployment pay from trade unions

Certain lump sum and compensation payments and benefits

1st £30000compensation for loss of a job, incl. statutory and contractual redundancy payments and, in certain cases, a lump sum in lieu of notice

Certain benefits in kind or perks

for directors or for an employee who is paid, including the value of benefits, £8500 or more in a year

But some benefits are taxable (such as living accommodation provided by an employer – but see opposite) no matter how much an employee is paid

Examples of taxable benefits include private use of a company car or van, motor fuel used for private journeys, low interest loans over £5000, medical insurance or treatment, round sum allowances, meals, non cash vouchers, school fees, gifts etc.

Certain benefits in kind or perks - For instance (be careful there are rules and restrictions)

Long service awards & awards under staff suggestion schemes (with restrictions) luncheon vouchers up to 15p/day (WOW!),

interest free, or low interest, loans of up to £5000 in a yearaccommodation provided that helps you do your job better, meals provided for all employees in a staff canteen, certain sports facilities, a mobile phone, parking at or near your workplace, Christmas parties (within limits),

certain childcare provisions (incl. childcare vouchers up to £55pw),

If your employer offers you help to meet your childcare costs (e.g. through childcare vouchers), your entitlement to tax credits is likely to be affectedtrivial gifts (e.g. a turkey, an ordinary bottle of wine, or a box of chocolates), Relocation packages up to £8000, Work related training courses and Employer sponsored courses up to £15000 and Pension Provision

Share Options

Income from Self Employment, minus allowable expenses, – it doesn’t matter whether this is full time, part time, temporary, casual, as a sole trader or as a partner. Income from any self employed trade, profession or vocation must still be declared even if you make a loss

Foster Care receipts(below specified limits)

Pensions and State Benefits

For Social security benefits see http://www.hmrc.gov.uk/manuals/eimanual/EIM76000.htm

Pensions and State Benefits

For rates of social security benefits see http://www.dwp.gov.uk/mediacentre/pressreleases/2008/dec/NewBenefitRates.pdf

A list of taxable social security benefits is at http://www.hmrc.gov.uk/manuals/eimanual/EIM76101.htm

A list of non-taxable social security benefits is at http://www.hmrc.gov.uk/manuals/eimanual/EIM76100.htm

State Retirement Pension (SRP)

Voluntary pensionsnot connected to a past job and to which the taxpayer contributes annually

Christmas Bonus, Cold Weather & Winter Fuel Payments. Free TV Licence for over 75s

Personal and occupational pensions (PP and OP)

OP paid where retirement is due to an accident at work, injury or work related illness at work incl. disability pensions of members of the armed forces, or OP scheme is approved by HMRC,or Employee works outside UK so does not pay UK tax

An OP scheme is allowed to pay a tax free lump sum of up to 25% of the capital value of the fund up to a maximum of 25% of the ‘Lifetime Allowance’ specified by the government

Retirement annuity

War Disablement Pension, including allowances, war orphan’s and war widow’s/widower’s pensions

Job release benefitfor men aged 62 and 63 on part time schemes and disabled men aged 60-63 on both part and full time schemes

Jobseeker’s Allowance

Job Finders Grant, Working Tax Credit, Child Tax Credit, Pension Credit

Statutory Sick/Maternity/Paternity/Adoption Pay (SSP, SMP, SPP and SAP)

Maternity Allowance, health in pregnancy grant, one parent benefit, sure start maternity grant

Income Support paid to people who are on strike

Income Support(if not on strike),Council Tax Benefit, Housing Benefit, Income related employment and support allowance, social fund payments, Community Care Grants, Crisis Loans, Earnings top up, Eye tests,Low cost bus passes

Invalid Care Allowance

Attendance Allowanceand Constant Attendance Allowance, Disability Living Allowance, Disablement Benefit, Severe Disablement Benefit & severe Disablement Allowance,

Incapacity Benefit (IB) (after week 29)

IB(first 28 weeks), lower rate short-term IB

Widows pension, Bereavement Allowance, Widowed Mother’s/Parent’s Allowance (WPA)

Lump sum Bereavement Payments, funeral grants

Industrial Death Benefit Pension

Carers Allowance

Child benefit and Guardian’s Allowance

Contributory Employment and Support Allowance

Sometimes you can get extra benefit if you have a dependent. The tax treatment of adult dependency additions follows that of the basic benefit:

Sometimes you can get extra benefit if you have a dependent. Child dependency additions are not taxable, even if the basic benefit itself is taxable.

Income from property, savings and investments

Rent and other property income, minus allowable expenses, (except the exempt items opposite) Income from property must still be declared even if you make a loss

Rent a room scheme – first £4250 (or £2125 each if let jointly)

Accounts and bonds and Pensioner bonds

 

Dividends including scrip dividends(except where exempted opposite)

Dividends from ISAs and PEPs

Interest and Dividend Distributionsfrom UK authorised Unit Trust and open ended investment companies Income(except where exempted opposite)

Income from ISAs and PEPs

Bank and building society interest(except where exempted opposite)

Interest from ISAs and PEPs

Savings Certificates

National Savings interest(except where exempted opposite)

1st £70 of National Savings Ordinary Account interest

Interest on National Savings Certificates

Other Income

Overseas Incomefrom investments and savings, pensions, benefits, land and property, overseas trust, company and other entity, capital gains

Damages awarded for personal injury and associated interest awarded by a court

Trust Income– income from trusts and settlements and certain income from estates of deceased persons

Insurance benefits paid to a person who is sick, disabled or unemployed to meet their financial commitments(e.g. benefits paid under mortgage protection /permanent health/ payment protection and long-term insurance)

Compensation and interest for mis-sold personal pensions taken out between 29/4/1988 and 30/6/1994

Jurors’ financial loss allowance, if the juror is an employee

Some maintenance or alimony payments

Student grants, incl. the parental contribution and scholarships, Fares to school, educational maintenance allowance, school uniform and clothing grants

Young Person’s Bridging Allowance

Employment rehabilitation or training allowances

Youth training scheme allowance unless the trainee is an employee

Hospital patient’s travelling allowance

Home improvement, repair and insulation grants

Capital gains on disposal (sell, give away, exchange or transfer)of shares, unit trusts, land and property and other capital assets(except where exempted opposite)

Gains on UK Life Assurance Policiesand void ISAs or PEPs

You can't give assets to your children or others or sell them assets cheaply without having to consider CGT

Capital Gains Exemptions include

Each person has a non-transferable annual tax free allowance on a use it or lose it basis (2008/09 £9600)

Principal Private Residence Relief (PPRR) - Gains on your home - house and grounds must not exceed ½ hectare (about 1¼ acres). Also if it has not always been your home, or if part is used exclusively for business, then relief may be restricted.

Transfers between husband and wife or between civil partners

Private cars

Personal effects and goods (Chattels) worth £6,000 or less (each) when you dispose of them

Disposing of an asset to charity

Company reorganisations and takeovers

ISAs or PEPs

UK Government gilts (bonds)

money which forms part of your income for income tax purposes

If someone dies and leaves their belongings to their beneficiaries, there is no CGT to pay at that time (but there may be Inheritance Tax) - however if an asset is later disposed of by a beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal

Winnings from gambling (betting, lottery or pools winnings) incl. premium bond prizes and football pools, horse racing, the National Lottery etc.