The UK tax system

Taxation in Great Britain - Help from a lawyer

The taxation system in Great Britain is not simple; it has many levels and nuances. There are many different tax rates, thresholds and benefits in the UK that affect both individuals and businesses. As a business owner, you will be subject to many of these requirements.

Corporate taxation in Great Britain

• Income tax
• Tax on income from fuel production (only for oil and gas companies)
• Tax on income from the sale of fixed assets (only for private entrepreneurs and trust funds)
• Value added tax (VAT – 17.5%)
• Excise tax on petroleum products
• Annual excise tax on trucks, taxis and buses
• Business tax on tenants of non-residential premises (in some counties)

Taxation of individuals in Great Britain:

• Income Tax – tax on the income of individuals.
• National Insurance Contributions - deductions to pension and insurance funds.
• Capital Gains Tax – tax on profit from the sale of assets.
• Inheritance Tax (Inheritance Tax) – tax on inherited property.
• Municipal tax (Council Tax) – a tax on street maintenance, garbage removal, etc.
• Stamp Duty - tax when buying real estate.
• Annual excise tax on owners of personal vehicles (for cars manufactured after 1973).
• Taxes for property insurance and TV ownership (including black and white TVs)
• Residential house tax in some UK counties.

Corporate tax (Company Tax)

UK resident companies are subject to corporation tax on all sources of income and capital gains, regardless of where they arise. Non-resident companies that have a permanent establishment in the UK pay tax on the income associated with this establishment. The corporate tax rate changes every year: 20% for the period until 31 March 2017, 19% until 31 March 2018, and is scheduled to decrease to 17% from 1 April 2020. A reduced rate of 10% applies to income from patents. Dividends received from UK and foreign companies are usually exempt from tax if certain conditions are met.

Capital Gains Tax

Capital gain is defined as profit from the sale of capital assets, which include both real estate and financial assets (stocks, bonds, etc.). Capital gains tax is calculated at the standard corporate tax rate (19%).

Non-resident companies only pay capital gains tax on the sale of assets used in transactions or for trading purposes through a UK permanent establishment. Since April 2015, non-UK residents also pay tax on certain types of residential property sales in the UK.

Capital gains losses can only be offset against capital gains in the same financial year or carried forward to future years to offset future capital gains.

Employer Contributions

The minimum social contribution of the employer until April 6, 2018 is 1.0% of the qualifying income of the employee. Until April 6, 2019, it will be 2.0% of income, and after April 6, 2019 - 3.0%.

On an employee's earnings above £156 per week, the employer pays a contribution of 13.8%.

Fringe Benefits Tax is not charged.

Legal analysis of the situation - the UK tax system

Legal analysis of the UK tax system covers a detailed examination of the complex tax structure, including corporation tax, capital gains tax, social security contributions and other taxes affecting individuals and businesses. Legal analysis of the situation provides an assessment of the compliance of tax obligations with current legislation, in particular, verification of the correctness of the application of rates and benefits, as well as the compliance of tax procedures. The legal audit of tax obligations and social contributions includes an audit of compliance with all requirements and the detection of possible violations, which is important for the correct performance of all tax and financial obligations.

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