Income, Income Tax and IR35
Income
Income includes all your employment earnings, dividend, interest, property rental and business profits. All of this income is subject to tax if you are resident in the UK. Different rules will apply if you are not resident in the UK.
Business income includes all the amounts you have billed your customers. If you are VAT registered this amount will exclude VAT but will include any gain on the Flat Rate Scheme (see F for more information).
Income tax
Income tax is payable on all your earnings and income (as described above) less your personal tax free allowance. The tax rate varies depending on your level of income.
At present (2013-14) the personal allowance is £9,440 and the tax bands are set at 20%, 40% and 45% for incomes up to £32,010, between £32,011 and £150,000 and exceeding £150,001 respectively.
Follow this link for other years.
IR35
This is a key piece of tax anti-avoidance legislation aimed at contractors. The legislation applies to contractors who work through their own Limited company. Each contract is assessed separately, it is the contract rather than the contractor that is investigated. There are many articles on IR35, see this category in our listing. If you need an introduction then read this post.