Optimizing Remuneration
Optimizing Remuneration
Support paid monthly to someone with parental responsibility for dependent children aged either under 16, or under 20 and in education or training. See here for more.
The cost of the care of dependent children by registered individuals or organisations.
The base rate of tax can be claimed back against money used for childcare expenses through the tax-free childcare scheme. In this, if you are paid £500, then with base rate of tax being 20%, £100 would be paid in tax. If you contribute £400 to childcare costs, then through the tax-free childcare scheme HMRC will contribute that £100.
The name 'tax-free' is a little deceptive here as higher-rate tax payers don't get their additional tax refunded, and both employer and employee national insurance contributions are still paid.
A Payment made to shareholders, typically sourced from profits. Some profit may be retained and used by the business, the remainder is equally divided among shareholders. Note that Corporation Tax is payable on profits before any dividend distribution.
Employees who have an employer make Class 1 national insurance contributions based on their wages. Self-employed individuals make Class 2 and 4 national insurance constributions based on their taxable income. For more on this, see here.
Employers must pay National Insurance contributions for every person that they employ, with the amount owing for an individual calculated based on the wages of that person. This is additional to the wages, and separate to the Individual's own National Insurance contributions (which are again based on the individual's wages). For more on this, see here.
The contribution made by an Employer to an Employee's pension, separate to any wage payments. This is subject to a minimum payment level.
The year over which tax is calculated. In the UK this begins on April 6, every year.
Money given to registered charities (see here).
Earnings on cash deposited, for example at a bank.
Income typically based on work done, paid to a Worker, by an Employer. This income is governed by a contract but may not involve fixed hours - the contract may include terms such as 'casual', 'zero-hours', or 'as required', however the employer does deduct tax and national insurance contributions from wages.
The lowest wage legally payable by an employer. This is age-dependent. Further information is available here. This need not apply in cases where the employee is also a company director.
National Insurance is levied at seven different levels, specified by letter - the most common is A.
Further details are available here.
A partnership is a business organisation between individuals in which management and operations are shared. This may or may not be a Limited Liability Partnership (LLP).
This is the total amount that you can contribute to your pension savings in a given year which is eligible for tax relief. Further contributions are allowable, however only from already taxed income. If, for example salary sacrifice tax contributions exceed your pension annual allowance a pension tax charge will be incurred equivalent to the tax that should have been paid on that excess amount. See here for further information.
The amount of income that an individual is able to earn free of tax each year. See here for more on this.
A pension scheme that takes a contribution and credits it with the base rate of tax which would have been deducted from income to result in this contribution. For example; if an individual receives income of £10,000 which is taxed at a base rate of 20% - leaving £8,000 which is then paid into a Relief at Source scheme, then the scheme provider will credit the account with a further £2,000. If the individual pays tax at a higher rate then further relief is obtained through submitting a tax return.
Expenses incurred in the maintenance of properties generating rental income. A guide to allowable expenses is given here. One item that is explicitly not included is any financing cost (e.g. mortgage interest).
The financing cost of a rental property; typically mortgage interest. This is treated differently to other expenses. Details are given here.
Gross income from property rental, for example from the provision of a home under an Assured Shorthold Tenancy. Note that rental income is explicitly different to things such as catered or holiday room rental, which is more likely to be treated as a business or self-employed work.
Income paid typically to an Employee, by an Employer. This does not include any salary sacrificed income. A salary is generally a fixed income paid regularly, for instance once a month, as specified in an employment contract.
An employee's pension contribution, made through Salary Sacrifice i.e. taken directly from an individual's remuneration before tax obligations are calculated. This is the most common way for an employee to make contributions to a work-based pension scheme.
Paid work without a contracted Employer. Further details are given here.
Expenses incurred in the undertaking of self-employment. Detailed at length here.
Income received for work done in a self-employed capacity, before any expenses or taxes are deducted.
Thirty hours free childcare consists of two parts; first, the universally available fifteen hours free childcare per week, and second an additional fifteen hours per week during school term time for qualifying applicants.