RE1768 - Non-residents: Examples

Example 1

For 1996-97 a non-resident has UK income of bank interest (received gross) £10,000 and is entitled to the basic personal allowance of £3,765.

The first calculation: Liability on total income is (£10,000 - £3,765) @ 20% = £1,247.

The second calculation: The cap is nil because the bank interest is excluded income. There is no tax to pay under self assessment.

Example 2

For 1996-97 a non-resident has UK income of bank interest (received gross) £5,000, rents £2,000 and dividends £4,000 and tax credits £1,000. The basic personal allowance of £3,765 is due.

The first calculation: Liability on total income is (£12,000 - £3,765) @ 20% = £1,647.

The second calculation: The bank interest and dividends are `excluded income' and personal allowances are disregarded. The cap is rents (£2,000 @ 20%) = £400 plus tax deducted at source £1,000 = £1,400. The liability is therefore restricted to £1,400 and the tax to pay under self assessment is £400.

Example 3

For 1996-97 a non resident has UK income of rents £5,000 and is entitled to the basic personal allowance of £3,765.

The first calculation: Liability on total income is (£5,000 - £3,765) @ 20% = £247.

The second calculation: Rents are not excluded income so the cap is (£3,900 @ 20% plus £1,100 @ 24%) = £1,044. Clearly the cap does not reduce the charge and the tax payable under self assessment is £247.