income tax


income tax
= IT
A direct tax on an individual's income. In general, individuals can earn income without paying tax up to a threshold, with subsequent income giving rise to tax liabilities, usually at increasing rates as income increases ( progressive taxation).
In UK tax legislation income is not defined; amounts received are classified under various headings or schedules and these schedules are subdivided into cases. In order to be classed as income an amount received must fall into one of these schedules. There are some specific occasions when the legislation requires capital receipts to be treated as income for taxation purposes, e.g. when a landlord receives a lump sum on the granting of a lease. In the UK the importance of the distinction between income and capital has diminished since income and capital have been charged at the same rate. (Prior to 6 April 1988 capital was charged at 30%, whereas the top rate of income tax was 60%.) The tax is calculated on the taxpayer's taxable income, i.e. gross income less any income tax allowances and deductions. If the allowances and deductions exceed the gross income in a fiscal year, no income tax is payable. In the UK, there are three tax-rate bands: a starting rate of income tax of 10% on taxable earnings up to £2090, a basic rate of income tax of 22% on taxable earnings between £2090 and £32,400, and a higher rate of income tax at 40% on taxable earnings over £32,400 (2005–06 figures).
See also: pay as you earn

Accounting dictionary. 2014.

Look at other dictionaries:

  • income tax — n: a tax on the net income of an individual or a business compare excise, property tax Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • Income tax — Income In come, n. 1. A coming in; entrance; admittance; ingress; infusion. [Obs.] Shak. [1913 Webster] More abundant incomes of light and strength from God. Bp. Rust. [1913 Webster] At mine income I louted low. Drant. [1913 Webster] 2. That… …   The Collaborative International Dictionary of English

  • income tax — income ,tax noun count or uncount * a tax based on your income that you pay to the IRS once a year or every three months: the basic/higher rate of income tax …   Usage of the words and phrases in modern English

  • income tax — n. a tax on income or on that part of income which exceeds a certain amount …   English World dictionary

  • income-tax — [inkɔmtaks] n. m. ÉTYM. 1803 1804; incometax, attestation isolée, 1801, in Höfler; mot angl., de income « revenu », et tax « taxe, impôt ». ❖ ♦ Didact. Dans les pays de langue anglaise, Impôt sur le revenu …   Encyclopédie Universelle

  • income tax — ► NOUN ▪ tax levied directly on personal income …   English terms dictionary

  • income tax — income taxes N VAR Income tax is a certain percentage of your income that you have to pay regularly to the government …   English dictionary

  • income tax — n [U] tax paid on the money that you earn …   Dictionary of contemporary English

  • income tax — a tax levied on incomes, esp. an annual government tax on personal incomes. [1790 1800] * * * Levy imposed by public authority on the incomes of persons or corporations within its jurisdiction. In nations with an advanced system of private… …   Universalium

  • Income tax — Public financeAn income tax is a tax levied on the financial income of persons, corporations, or other legal entities. Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or… …   Wikipedia

  • income tax — A state or federal government s levy on individuals as personal income tax and on the earnings of corporations as corporate income tax. Bloomberg Financial Dictionary * * * income tax ˈincome tax noun [countable, uncountable] TAX in Britain, a… …   Financial and business terms