Income tax touches almost every client a solicitor advises — the employee weighing up a company car, the sole trader making a loss, the landlord with a mortgage, the partner sharing profits, and the director deciding between salary and dividends. Getting the figure right, and knowing which reliefs apply, is part of the everyday work of advising individuals and businesses well.
This lesson builds your understanding piece by piece, from what income tax is to a full liability calculation you can run yourself.
What this lesson covers:
- Nature, Scope and Categories of Income — who pays income tax, the income-versus-capital line, the three categories of income, and how residence shapes liability.
- Employment Income and Benefits in Kind — deductible expenses, taxing perks like cars and accommodation, exemptions, and termination payments.
- Trading Income, Allowances and Losses — adjusting profit, capital allowances, and the options for relieving a trading loss.
- Property and Partnership Income — rental profits and losses, mortgage interest relief, and how partners are taxed individually.
- Allowances, Savings, Dividends and Order of Taxation — the personal allowance, savings and dividend rules, and the order income fills the bands.
- Reliefs, Pensions and Compliance — gift aid, pension relief, the full calculation, payment deadlines and penalties.