Tax is deducted only on payments of interest, annuities, royalties and other annual payments to non residents. In most cases the charge is an allowable deduction for tax purposes, but in the case of interest payments to non residents by investment companies, the company obtains relief by deducting and retaining income tax on payment and not deducting the gross amount. All interest payments are deductible in computing assessable income by set-off first against income to which they relate, then against unearned income, then against earned income.
Personal Allowances and Exemptions
Individuals are entitled to a range of personal allowances varying with age, marital status and dependants and whether the assessable income was earned or investment income.
For 1997 a single person is entitled to an allowance of £5,500 and a married couple are entitled to £11,000.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.