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The Main Types of Taxation

Income Tax - which is levied on both earned income and savings income. For income tax we are all entitled to a personal allowance and Tax code, the code includes a letter and a number. The number represents the amount of tax-free income the person is entitled to receive during a tax year. The starting point will be the basic personal allowance. If the person receives taxable benefits or has other sources of taxable income, such as savings income, then the code will be reduced. If the employee paid too much tax in a preceding year then the code will be increased

 

Capital Gains Tax - which is levied on capital gains realised when the disposal of a chargeable asset results in a capital gain. For capital gains tax we are all entitled to an annual exemption.

 

Inheritance Tax - which is levied on the value of an individual's estate on death and also on certain lifetime gifts which reduce the value of their estate. For IHT we all have a nil rate band.

 

National Insurance - which is levied on income earned from a UK source

 

The above taxes are relevant for people who are resident, ordinarily resident, UK and Non UK Domicile

 

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Levels and bases of, and reliefs from, taxation are subject to change