Click on a letter below to find simple definitions to difficult tax terms.
A, B,
C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, Z,
Glossary: H
Higher rate tax: For 1999/2000, the higher rate of income tax is 40%.
You pay tax at the starting rate (10%) on the first £1,500 of your taxable income (the starting rate band), at the basic rate (23%) on any income between £1,500 and £28,000 (the basic rate band), and tax at the higher rate (40%) on any income in excess of £28,000. However, you do not pay basic rate tax on savings income, such as interest and dividends. To the extent that your interest from banks or building societies falls within the basic rate band it is taxed at the savings rate of 20% instead of the basic rate. To the extent that your dividend income falls within the basic rate band it is taxed at the savings rate of 10%. To the extent that dividend income falls into the higher rate band it is taxed at 32.5%.
Hobby: Income from a hobby is not taxable and related expenses are not allowable.
There are criteria to differentiate between a business and a hobby. If in doubt, contact the Inland Revenue, accountant or Tax Advisor.
Holdover relief: If you give an asset away for no monetary gain and a capital gain arises, in some circumstances you can elect for the gain to be heldover or deferred. The donee (the person you gave the asset to) inherits your original base cost of the asset. When the donee disposes of the asset, the donee's gain will include the gain held over on your gift, and the donee will be liable for any capital gains tax due.
Home: The place where you normally reside.
Home office: If you mainly work from home, you may have set aside a room which you normally use as an office.
Home to work travel: Travel from your home to your place of work. This travel expense is not allowable for tax purposes unless you can show that your home is your business base, or your permanent workplace if you are an employee.
