Income tax

An income tax is a tax levied on the financial income of persons or of corporations. Various income tax systems exist, ranging from a flat tax to a progressive tax system. A tax levied on the income of companies is often called corporate tax, corporate income tax or corporation tax. Individual income taxes generally tax the total income of the individual (with some deductions permitted), while corporate income taxes often tax net income, the difference between gross receipts and expenses.

Income tax in the UK

Income tax is an annual tax, and is reimposed each year in the annual Finance Act.

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The British income tax has a number of bands: 10% (lower rate), 20% (basic rate for interest), 22% (basic rate), 32.5% (higher rate for UK dividends) & 40% (higher rate for other income). There are also a number of allowances allowed before the tax bands apply.

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