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Hi all,

I have a bank ac.
I need one of my relative here in UK to transfer some amount to my ac.
Will I be charged it as an Income or in a cumulative way.

How does taxable income work here?

Thanks in advance.

-tot

Taxable Income depends on how the income was made -

1. Earnings through professional work - This follows standard income tax rules and the money is taxed before it reaches your hands

2. Earnings from other sources like bank deposits, dividends etc - Here the interest earned is net of tax and once again, what you get in hand from the bank will be taxed and given so nothing to worry about

3. Earnings from other sources likes sale of property, sale of shares etc - I am not certain how this works so cant help

Finally, from what little I know, most investments have capital gains tax. For example - if you invest in a Mutual Fund or Investment Trust and in a year's time make a 40% profit, once you sell, a 20% capital gains tax will automatically be applied on the interest before returning your amount. You dont need to do anything on your own to ensure the right tax is cut.

The only way to save on capital gains tax thats levied on Bank FDs or Investments is to go through the ISA route. Any interest earned on an amount of upto £10k odd through this route will not incur capital gains and the government will not take away any interest you make. So be it opening a Fixed Deposit in a Bank or investing in shares/trusts etc, if you open and do it via an ISA account, you can save tax on the interest you earn.

KP

Thanks for the info.

Therefore does that mean transfer from a relative will be not be charged tax?

Cheers!

-tot

Why should it be taxed?
I am assuming you and your relative are both in the UK - or are you outside the UK?

If both accounts are in the UK, then your relative is absolutely fine and no tax is levied because the money transfered has been taxed already and your relative is just doing an inter or intra bank money transfer, nothing else!!!

Once you receive the money, I dont think there is any special tax levied. Once you have the money in your account, the only tax levied is on the interest you earn which will be deducted automatically

All the info I gave may not be applicable if you are planning to transfer huge sums of money as that can trigger some money laundering interest. Just keep it under £50k and you should be fine!

KP

kenfrapin wrote:
Once you receive the money, I dont think there is any special tax levied. Once you have the money in your account, the only tax levied is on the interest you earn which will be deducted automatically

I think it's only basic rate income tax that is deducted automatically. If you are a higher -rate taxpayer, you need to pay the extra.