Verified Facts
The tax rates in the United Kingdom range from 20% to 45% for personal income tax, with a corporate tax rate of 19% and a standard VAT rate of 20%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
The United Kingdom has a worldwide taxation system, which means that individuals who are tax residents in the UK are subject to tax on their worldwide income, regardless of where it is earned. However, there are certain exemptions and reliefs available for foreign income. The UK also has a system of tax residency rules, which determine an individual's tax status based on the number of days they spend in the country. Generally, an individual is considered a tax resident in the UK if they spend more than 183 days in the country in a tax year.
The UK tax system is administered by HM Revenue & Customs (HMRC), which is responsible for collecting taxes, enforcing tax laws, and providing guidance to taxpayers. The tax year in the UK runs from April 6 to April 5 of the following year, and taxpayers are required to file their tax returns by October 31 for paper returns and January 31 for online returns. The UK has a comprehensive tax treaty network, with over 130 countries, which helps to prevent double taxation and fiscal evasion.
Personal Income Tax
| Income Bracket (GBP) | Tax Rate |
|---|---|
| 0 - 12,570 | 0% |
| 12,571 - 50,270 | 20% |
| 50,271 - 150,000 | 40% |
| 150,001 and above | 45% |
| Taxpayers in the UK are entitled to various deductions and allowances, such as the personal allowance, which is the amount of income that is tax-free. There are also allowances for pension contributions, charitable donations, and mortgage interest. Taxpayers are required to file their tax returns online, and the deadline for filing is January 31 following the end of the tax year. Failure to file a tax return or pay tax on time can result in penalties and fines. |
Corporate & Business Tax
- The corporate tax rate in the UK is 19%, which is one of the lowest in the G20.
- Small businesses with profits of up to £50,000 are eligible for a lower tax rate of 19%, and may also be eligible for small business incentives, such as the Annual Investment Allowance.
- The UK has a number of free zones, also known as Freeports, which offer tax and regulatory benefits to businesses that operate within them.
- Companies that are incorporated in the UK are required to register with HMRC and obtain a Unique Taxpayer Reference (UTR) number.
- Companies are also required to file their annual accounts and tax returns with HMRC, and to pay their corporation tax on time.
VAT / Sales Tax
- The standard VAT rate in the UK is 20%, which applies to most goods and services.
- There are reduced VAT rates of 5% and 0%, which apply to certain goods and services, such as children's car seats and most food products.
- Some goods and services are exempt from VAT, such as financial services and residential property rentals.
- The UK has a tourist refund scheme, which allows overseas visitors to claim a refund of VAT on certain purchases.
For Expats & Foreign Workers
- Tax residency rules in the UK are based on the number of days spent in the country, and expats may be considered tax residents if they spend more than 183 days in the UK.
- The UK has a double taxation treaty network, which helps to prevent double taxation and fiscal evasion.
- Expats who are tax residents in the UK may be eligible for social security benefits, such as the State Pension.
- Expats who are not tax residents in the UK may be eligible for remittance basis of taxation, which allows them to pay tax only on income that is remitted to the UK.
- Expats who are tax residents in the UK may be required to file a tax return and report their worldwide income.
- Expats who are not tax residents in the UK may be subject to withholding tax on certain types of income, such as dividends and interest.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to income tax in the UK.
- Capital gains tax applies to gains made on the disposal of chargeable assets, such as shares and property.
- Cryptocurrency is subject to capital gains tax in the UK, and gains made on the disposal of cryptocurrency are taxable.
- Tax losses on investments, including cryptocurrency, can be offset against gains made on other investments.