If you ever thought it was easy to decide which
tax rate applied to which income - think again.
Try working this one out. Imagine you run your own limited
company. You earn a salary of say £27,000 pa. You may have a small amount
of savings income from a building society. Due to an unexpected profit
on a one-off contract you take a dividend of £6,000. Later you want to
buy your partner a birthday present - you take an extra bonus f rom the
company - a total of £100, from which you have to pay PAYE, employer's
and employee's National Insurance contributions and any extra tax bill
you incur - how much is left?..less than £34, the rest goes to the Inland
Revenue. This chart explains
how it works.
