Taxation in UK

8/6/2019 Taxation in UK

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Tax year in U.K

The tax year in the UK, which applies

to income tax and other personal

taxes, runs from 6 April in one year to

5 April the next (for income tax

purposes). Hence the 2010-11 tax yearran from 6 April 2010 to 5 April 2011


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UK taxation receipts for the tax year 2008-2009

29%

19%

15%

9%

5%

5%

4%


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Types of taxes :

Income tax

Inheritance tax

Council tax

Value added tax Excise duties

Stamp duties

Motoring tax Corporate tax

National Insurance

contributions

Capital gains tax

Business rates

Exemptions on

Investment


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Income tax :

RateDividend

incomeSavings income

Other income

(inc

employment)

Band (above

any personal

allowance)

Lower rate N/A 10% N/A

0 - 2440applies only if total

income falls in this

band

Basic rate 10% 20% 20% 0 - 37,400

Higher rate 32.5% 40% 40% over 37,400

Additional rate 42.5% 50% 50% over 150,000


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Inheritance tax

Inheritance tax is levied on "transfers of value",

meaning:

the estates of deceased persons; gifts made within seven years of death

"lifetime chargeable transfers", meaning transfers

into certain types of trust.


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Council Tax

Band Value Ratio Ratio as % Average

A up to 40,000 6/9 67% 845

B

40,001 to

52,000 7/9 78% 986

C52,001 to

68,0008/9 89% 1,127

D68,001 to

88,0009/9 100% 1,268

E88,001 to

120,000 11/9 122% 1,550

F120,001 to

160,00013/9 144% 1,832

G160,001 to

320,00015/9 167% 2,113

H320,001 and

above 18/9 200% 2,536

The basis for the tax is residential property, with discounts forsingle people


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Value Added Tax (VAT )

The third largest source of government revenues is

value added tax (VAT), charged at 20% on supplies ofgoods and services. It is therefore a tax on consumer

expenditure


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Stamp Duties

Stamp duty is charged on the transfer of shares and

certain securities at a rate of 0.5%. Modernisedversions of stamp duty, stamp duty land tax and

stamp duty reserve tax, are charged respectively on

the transfer of real property and shares and

securities, at rates of up to 4% and 0.5%respectively


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Motoring Tax

Motoring taxes include: fuel duty (which itself also

attracts VAT), and vehicle excise duty. Other fees and

charges include the London congestion charge, and insome areas on-street parking (as well as associated

charges for violations).


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Corporate Tax

Corporation tax is a tax levied in the United

Kingdom on the profits made by companies and

on the profits of permanent establishments ofnon-UK resident companies and associations that

trade in the EU. Due to tax competition this main

tax was reduced to 28% and is expected to be

reduced again to 26%


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NationalInsurance contributions

National insurance contribution falls into classes

depending on each employees' position and salary.This tax is also paid by the employer around 12% on

each employee who earns over the lower earnings

threshold.


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Capital Gains Tax

A capital gain is a profit that results from

investments into a capital asset, such as

stocks, bonds or real estate. Capital gains are

subject to tax at 18-28%.


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ExemptionsMany holdings and income from them are exempt for

"historical reasons". These include:

Special, low tax arrangements for the monarchy, such asthe arrangement used by the British Royal Family to avoid

inheritance taxation.

Reduced income tax for special classes of people, who

claim to be resident in the UK but not "domiciled".

The income of charities is usually exempt from UK income

tax.

Taxation in UK

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