1) The document provides an overview of taxation in the United Kingdom, outlining various taxes such as income tax, value added tax, corporate tax, capital gains tax, and others.
2) Key details are given for each tax, including tax rates, allowances, payment deadlines, exemptions, and penalties.
3) Taxes are levied by both central and local governments in the UK, with revenue from taxes going towards public services and programs.
3. Tax Bodies and Taxes
Central Government Local Governments
– Income Tax
– National Insurance
– Value Added Tax
– Corporation Tax
– Capital Gains Tax
– Inheritance Tax
– Stamp Duty
– Excise Duty
– Customs Duty
– Insurance Premium Tax
– Air Passenger Duty
– Council Tax
– Domestic Rates in Northern Ireland
– Business Rates in England and Wales
– Business Rates in Scotland
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4. INCOME TAX
¿Payers? Residents and Non-residents
¿Tax base?
Residents – Worldwide Income
Non-Residents – Only UK Income
¿Payment Frequency? Quarterly
¿Couples? Considered as one taxpayer
¿Deadline? January 31
¿Declaration? Filled once in 5 years
4
5. 5
INCOME TAX: Taxable income
You pay tax on:
• Employment/self employment earned
money
• Some state benefits
• Most pensions: state pensions, company
and personal pensions and retirement
annuities
• Interest on savings and pensioner bonds
• Rental income(unless you’re a live-in
landlord and get £4,250 or less)
• Benefits you get from your job
• Income from a trust
• Dividends from company shares
You don’t pay tax on:
• Income from tax-exempt accounts: ISAs
(15,240)
• Some state benefits
• Premium bond or National Lottery wins
• The first £4,250 of the rent you get from
a lodger in your home
6. INCOME TAX
Tax year 2015-2016
Income Range Normal Rates Dividend Rates
Basic Rate Up to £31,785 20% 10%
Higher Rate £31,785 - £150,000 40% 32.5%
Additional Rate Over £150,001 45% 37.5%
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Rates
7. INCOME TAX: Personal allowances
Tax year 2015-2016
Born between 6 April 1938 and 5 April 1948 2015-2016
£0 to £26,999 £10,500
£27,000 to £27,999 Between £10,500 and £10,000 and the allowance
goes down by £1 for every £2 that your adjusted
net income is over £27,000
£28,000 to £100,000 £10,000
7
Born before 6 April 1938 2015-2016
£0 to £27,699 £10,660
£27,700 to £27, 819 Between £10,660 and £10,000 and the allowance
goes down by £1 for every £2 that your adjusted
net income is over £27,700
£28,820 to £100,000 £10,600
8. SELF ASSESMENT DEADLINE
Register for self assessment Register by 5 October 2015
Paper tax returns Midnight 31 October 2015
Online tax returns Midnight 31 January 2016
Pay the tax you owe Midnight 31 January 2016
8
INCOME TAX
Tax year 2015-2016
If your tax return is up to 3 months late you’ll pay fine of £100.
Deadlines and Penalties
9. CORPORATE TAX
¿Payers? Residents and Non-residents
¿Tax base?
Residents – Worldwide Income
Non-Residents – Only UK Income
¿Payment Frequency? Annually
¿Couples? Considered as one taxpayer
¿Declaration? Filled once in 5 years
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10. The Corporation Profit Tax Rate is 20% since 1 April, 2015.
Since April 1, 2014
10
CORPORATE TAX
Tax year 2015-2016
Profit Rate
Small Profit < £300,000 20%
Above £300,000 21%
Marginal Profit £300,000 to £1,500,000 Only before 1
April, 2015
Rates
11. CORPORATE TAX: Deductions
• Revenue expenses – deductible
• Interest and other financing costs – deductible
• Accounting depreciation – non-deductible
• Goodwill, intellectual property etc. – deductible 4%
Patented Inventions
RP*FY%((MR-IPR)/MR)
RP – profits from patent
FY – percentage
MR – main rate of profit tax
IPR – reduced rate of 10%
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Financial Year Percentage
1 April 2013- 31 March 2014 60%
1 April 2014 –31 March 2015 70%
1 April 2015 –31 March 2016 80%
1 April 2016 –31 March 2017 90%
1 April 2017 – 100%
12. Corporate Tax: Penalties
Type of failure Penalty
range(unprompted)
Penalty range
(prompted)
Careless 0%- 30% 15% - 30%
Deliberate but not
concealed
20% - 70% 35% - 70%
Deliberate and
concealed
30% - 100% 50% - 100%
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13. WITHHOLDING TAXES
Dividends are always paid gross.
• Patent, copyright, royalties in UK => WHT=20%
• Several types of royalties are not subject for WHT: film royalties,
equipment royalties
• Interest payments => WHT=20%
Exclusions: payments of interest
• By UK company to UK resident company
• That qualify for exemption under EU interest and Royalties
Directive
• Paid to/by UK bank
• “short” interests
• That don’t arise in the UK
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14. ¿Declaration? Quarterly
VALUE ADDED TAX
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¿Payers? Businesses registered for VAT
¿Tax base? Taxable supplies
¿Payment Frequency? Every time a sales transaction
takes place
¿Deadline? 1 calendar month and 7 days after the end of
an accounting period
15. 15
• Any person (legal or individuals) is liable to register for VAT if the combined value
of its taxable supplies in the UK exceeded the registration threshold of £82,000 in
the preceding 12 months.
• Businesses making only zero rated supplies can request exemption from
registration.
• Businesses with taxable turnover below the registration thresholds may apply to be
registered on a voluntary basis.
• A business may deregister if the anticipated value of its taxable supplies in the next
12 months is less than the deregistration threshold of £80,000.
• Where a business is involved only in the making of exempt supplies, it’s not able to
register for VAT and is thus not able to recover any input VAT incurred.
VALUE ADDED TAX
16. VALUE ADDED TAX
¿Taxable Supplies?
• Business Sales
• Hiring or loaning goods to someone
• Selling business assets
• Commission
• Business goods used for personal reasons
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17. VALUE ADDED TAX
17
Rates
Rate % of VAT What the rate applies to
Standard
20%
Most goods and services
Reduced rate
5%
Some goods and services, eg
children’s car seats and home
energy
Zero rate
0%
Zero-rated goods and
services, eg most food and
children’s clothes
The standard rate of VAT increased to 20% on 4 January 2011 (from 17.5%).
18. 18
Surcharges and penalties
VALUE ADDED TAX
Defaults
within 12
months
Surcharge if annual
turnover is less than
£150,000
Surcharge if
annual turnover
is £150,000 or
more
2nd No surcharge 2% (no surcharge
if this is less than
£400)
3rd 2% (no surcharge if
this is less than
£400)
5% (no surcharge
if this is less than
£400)
4th 5% (no surcharge if
this is less than
£400)
10% or £30
(whichever is
more)
5th 10% or £30
(whichever is more)
15% or £30
(whichever is
more)
6 or more 15% or £30
(whichever is more)
15% or £30
(whichever is
more)
HMRC can charge you a penalty of up to:
•100% of any tax under-stated or over-claimed
if you send a return that contains a careless or
deliberate inaccuracy
•30% of an assessment if HMRC sends you one
that’s too low and you don’t tell them it’s wrong
within 30 days
•£400 if you submit a paper VAT Return,
unless HMRC has told you you’re exempt from
submitting your return online.
19. VALUE ADDED TAX
19
Exemptions
1. Land
2. Insurance
3. Postal services
4. Betting, gaming and
lotteries
5. Finance
6. Education
7. Health and welfare
8. Burial and cremation
9. Subscriptions to public
interest bodies
1. Subscriptions to public interest bodies
2. Sports, sports competitions, phys.
education
3. Works of art, etc.
4. Fund–raising events
5. Cultural services, etc.
6. Supplies of goods where input tax
cannot be recovered
7. Investment gold
8. Supplies of services by groups
involving cost sharing
20. INSURANCE PREMIUM TAX
¿Payers?
• an insurer who receives or intends to receive taxable insurance
premiums;
• someone who charges the insured an insurance related fee in respect
of a higher rate contract (a taxable intermediary).
¿Tax base? General insurance premiums
20
¿Deadline? You need to tell HMRC within 30 days of forming
the intention of receiving taxable premiums as the insurer.
¿Tax rate?
• a standard rate 6%
• a higher rate 20% - for travel insurance, mechanical/electrical
appliances insurance and some vehicle insurance
21. INSURANCE PREMIUM TAX
¿When should you register?
• You must be registered from the date you receive your first taxable premium.
• You need to tell HMRC within 30 days of forming the intention of receiving
taxable premiums as the insurer
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If you fail to notify about a change in registration particulars, on time, you may be
liable to a penalty of £250.
¿Exemptions?
Long-term insurance
Reinsurance
Insurance for commercial ships and aircraft
Insurance for commercial goods in international transit
Premiums for risks located outside the UK
22. NATIONAL INSURANCE
¿Payers?
an employee earning above £155 a week;
self-employed and making a profit of £5,965
or more a year
¿Tax base? Gross earnings
¿Payment Frequency? Annually
¿Couples? Considered one taxpayer
¿Deadline? April 5-6
¿Declaration? Filled once 22
23. NATIONAL INSURANCE
23
National Insurance
Classes
Class 1
Class 1A or 1B
Class 2
Class 3
Class4
Employees earning more than £155 a week and under State Pension age
- they’re automatically deducted by your employer.
Employers pay these directly on their employee’s expenses or benefits.
Self-employed people - you don’t have to pay if you earn less than
£5,965 a year (but you can choose to pay voluntary contributions).
Voluntary contributions - you can pay them to fill or avoid gaps in your
National Insurance record.
Self-employed people earning profits over £8,060 a year.
24. 24
NATIONAL INSURANCE
Rates
You’ll pay less if:
• you’re in a contracted out workplace pension
• you’re a married woman or widow with a valid ‘certificate
of election’
• you’re deferring National Insurance because you’ve got
more than one job
Classes Rate for tax year 2015 to 2016
Class 1 £155 to £815 a week (£672 to £3,532 a month) and Over
£815 a week (£3,532 a month)
Class 2 £2.80 a week (if your profits are £5,965 or more a year)
Class 4 9% on profits between £8,060 and £42,385
2% on profits over £42,385
25. Penalties
25
• 5% for not having paid the full amount within 30
days of the due date;
• an additional 5% penalty for not having paid the
full amount within 6 months of the due date;
• a further 5% penalty for not having paid the full
amount within 12 months of the due date.
NATIONAL INSURANCE
26. CAPITAL GAINS TAX
¿Deadline? January 31
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¿Payers? Residents and Non-residents
¿Payment Frequency? On event of selling
¿Couples?
If you are married or in a civil partnership and living
together you can transfer assets to your husband, wife
or civil partner without having to pay CGT.
¿Declaration? No declaration
27. CAPITAL GAINS TAX
¿Tax base?
1. Most personal possessions worth £6,000 or more, apart from your
car.
2. Property that isn’t your main home.
3. Your main home if you’ve used it for business or it’s very large.
4. Most shares.
5. Business assets.
27
28. 28
CAPITAL GAINS TAX
Allowances and Rates
Year 2014-15 2015-16
Allowance £11,000 £11,100
Rate
18% or 28%,
depending on your
tax band
18% or 28%,
depending on your
tax band
29. Capital gains tax: penalties
29
If you miss the deadline of October 31 (paper return) or January 31
(online return) late filling penalties will apply.
Length of delay Penalty due
Up to three months £100
3 months – 6 months £10 per day – max £900 – plus the above
6 months – 12 months Max {£300; 5% of tax due + all above}
12 months or more Max {£300; 5% of tax due+ all above}. In serious cases up to
100% of the tax can be due instead.
30. Customs Duty
• Charged on imported goods produced outside EU if they’re above a
certain value, unless the duty comes to less than £9.
The value includes:
• The price paid for the goods
• Postage, packaging and insurance
You don’t pay Customs duty when travelling from EU and buying/sending
goods for you personal use.
If you travel from outside the EU, you should pay Customs duty on the
exceeding amount of your duty-free allowance.
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Type and value of goods Customs Duty
Anything under £390 No charge
Gifts worth £390 - £630 2.5%
Other goods above £630 The rate depends
on the type of good
31. Alcohol allowance
• Beer – 16 litres
• Wine (not sparkling) – 4 litres
• Spirits and other liquors over 22 %
alcohol – 1litre
• Fortified wine (sherry) sparkling
wine and alcoholic drinks up to 22%
alcohol-2litre
Tobacco Allowance
• 200 cigarettes
• 100 cigarillos
• 50 cigars
• 250g tobacco
31
Customs Duty: Allowances
There are more than 14,000 classifications and the duty rate is
different based on the country where the good is coming from.
The Average rates are 5% - 9%.
32. Two main customs penalties
32
Customs Duty: Penalties
Customs Civil Penalties (CCPs)-may be
imposed when traders have contravened
customs rules and regulations that
relate to customs duty, community
export duty, community import duty,
import VAT or duties of a preferential
tariff country
The minimum penalty is £250 and the
maximum penalty for further breaches
is either £1,000, or £2,500 for more
significant breaches
Customs Civil Evasion Penalties
(CCEPs)-may be imposed when it can be
established that a trader has dishonestly
evaded the payment of an import duty,
an export duty or import VAT
CCEPs are worked out as a percentage
of the duty traders have evaded or
sought to evade. The penalty is equal to
the duty dishonestly evaded or sought to
be evaded.
33. AIR PASSENGER DUTY
Payers
You need to register and pay Air Passenger Duty (APD) if you
operate a fixed wing aircraft from any UK airport that:
• weighs 5.7 tonnes or more
• is fuelled by kerosene
• carries passengers whether they’ve paid for the flight or not
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Frequency
An annual accounting scheme is available, which lets you make
just one return each year. To qualify for the scheme the annual
total of APD your business is likely to pay must be £500,000 or
less.
34. AIR PASSENGER DUTY
34
Tax rate
Destination Bands
and distance from
London (miles)
Reduced rate: (for
travel in the
lowest class of
travel available on
the aircraft)
Standard rate: (for
travel in any other
class of travel)
Higher rate: (for
travel in aircraft of
20 tonnes or more
equipped to carry
fewer than 19
passengers)
Band A (0 to
2,000 miles)
£13 £26 £78
Band B (over
2,000 miles)
£71 £142 £426
From April 1, 2015
35. Destination Bands
and distance from
London (miles)
Reduced rate: (for
travel in the
lowest class of
travel available on
the aircraft)
Standard rate: (for
travel in any other
class of travel)
Higher rate: (for
travel in aircraft
of 20 tonnes or
more equipped to
carry fewer than
19 passengers)
Band A (0 to
2,000 miles)
£13 £26 £78
Band B (over
2,000 miles)
£73 £146 £438
AIR PASSENGER DUTY
35
Tax rate
From April 1, 2016
36. AIR PASSENGER DUTY
36
Exempt
• Flight crew
• Children under the age of 12
• Transit passengers
• Emergency/ Public Service flights
• NATO flights
• flights which are intended to be of 60 minutes
duration or less or etc.
37. AIR PASSENGER DUTY
37
Penalties
Fixed penalty £250 chargeable for each offence
Geared penalty (1) 5% of duty involved in the offence or £250,
whichever is greater
Geared penalty (2) This is a new penalty that for APD will
apply to failure to give notice of liability to
be registered and return or document
inaccuracies. These penalties, which could
be up to 100% of the duty due, depending
on the circumstances of the case.
Daily penalty £20 per day for each day the offence
continues.
Can only be issued if a fixed or geared
penalty has already been issued for the
same offence.
38. Annual Tax on Enveloped
Dwellings (ATED)
Annual Tax on Enveloped Dwellings (ATED) is payable by
companies that own UK residential property (a dwelling) valued
above a certain amount.
ATED return is calculated if the property is
• is in the UK
• was valued at more than £1 million
• is owned completely or partly by a company, a partnership
38
39. Annual Tax on Enveloped
Dwellings (ATED)
Chargeable amounts for chargeable period 1 April 2015 to 31
March 2016
39
Property value Annual chargeable amount 2015 to
2016
More than £1 million but not more than £2
million
£7,000
More than £2 million but not more than £5
million
£23,350
More than £5 million but not more than £10
million
£54,450
More than £10 million but not more than £20
million
£109,050
More than £20 million £218,200
40. Annual Tax on Enveloped
Dwellings (ATED)
Exempt
• hotels
• guest houses
• boarding school accommodation
• hospitals
• student halls of residence
• military accommodation
• care homes
• prisons
• historic houses
40
41. Annual Tax on Enveloped
Dwellings (ATED)
Reliefs
• let to a third party on a commercial basis and isn’t occupied by anyone
connected with the owner
• open to the public for at least 28 days a year
• part of a property trading business and isn’t occupied by anyone connected
with the owner
• for the use of employees of the company, for the company’s commercial
business and where the employee does not have an interest (directly or
indirectly) in the company of more than 10%
• a farmhouse, if it is occupied by a qualifying farm worker who farms the
associated farmland
• a dwelling acquired by a financial institution in the course of lending
• owned by a provider of social housing
41
42. Annual Tax on Enveloped
Dwellings (ATED): Penalties
Late returns will be liable to a penalty of £100 per return. Further penalties fall
due for returns that are 6-12 months late (max {5% of tax due, £300}). In addition,
where the returns are more than 3 months late, HMRC may choose to impose a
daily penalty of £10 per day.
In case the payment is 12 months late, HMRC can also apply penalty of 30% of tax
due for payments that contain “careless” errors.
Companies are also obliged to maintain adequate records until the end of the
period during which HMRC may enquire and failure to do so may result in a penaly
of up to £3000.
42
43. Excise Duty
• When you buy excise duty taxed items in the UK the price
already includes the tax amount.
• When travellers bring such goods to UK from EU Member
country it is considered that the tax is already paid in the
home country.
• When travellers bring such goods to UK from outside the EU
country, they pay excise duty if they exceed the duty-free
allowance
• If alcohol or tobacco products are sent to the UK Excise Duty is
payable wholly.
43
44. EXCISE DUTY: Rates
Strength Duty rate per l for each % of
alcohol
General Beer Duty 18.74
1.2% - 2.8% 8.10 pence
2.8% - 7.5% 18.37 pence
> 7.5% 23.85 pence
44
Wine and made-wine of more than 22% strength is classified as spirit and the duty is
£27.66. Excise Wine Duty is stated for strengths between 1.2% - 15% and the duty is
£84.21 – £350.07.
Payment of Cider Duty depends on the strength and whether it is sparkling or still.
Hence, strengths vary from 1.2% - 8.5% and the rate per litre is 38.87 pence – 264.61
pence.
45. 45
Inheritance Tax
Rates
Above threshold £ 325,000- 40% inheritance tax
36% if 10% and more of the estate is given for charity
Estates pay Inheritance Tax if the inheritance is valued more than the
threshold £325,000.
•Usually the executor or the ‘administrator’ of the estate using the funds from the
estate.
•Trustees are responsible for paying Inheritance Tax on trust:
When assets are transferred into a trust;
When someone dies and a trust is involved when sorting out their estate;
when a trust reaches a 10 year anniversary of when it was set up.
Payers
46. 46
Who Pays inheritance Tax
Need To pay
Income Tax on profit you later earn from your inheritance
Capital Gains Tax if you later sell shares or a property you
inherited
Inheritance Tax on a gift the person gave you in the 7 years before
they died.
Inheritance tax if your inheritance is put into a trust and the
trust can’t or doesn’t pay
You must pay Inheritance Tax by the end of the sixth month after
the person died.
47. 47
Inheritance Tax: Penalties
IHT return is 6 months late – max {£300, 5% of tax due}
12 months and more – max{£300, 70% of the tax due}
The 70% figure can be reduced to 20% if the return is duly made
without prompting from HMRC.
If HMRC discovers inaccuracy first and writes to prompt a disclosure,
the minimum penalty will be 15%.
48. 48
Inheritance Tax exemptions and
reliefs
•Charities. gifts to charities, museums, universities or community amateur
sports clubs.
Political parties. 2 members elected to the House of Commons or 1 member
elected to the House of Commons and received at least 150,000 votes in a
general election
•Payment to live with living costs. Such as ex husband, child under 18 years
old or in full-time education, old age relative.
•Small gifts up to £ 250
Regular gift from the givers income. Christmas, birthday and wedding or
civil partnership anniversary presents, life insurance policy premiums, regular
payments into a savings account
49. 49
Inheritance Tax exemptions
and reliefs
•Wedding gifts. There’s no Inheritance Tax on a gift that was a wedding gift worth up to:
£5,000 to a child
£2,500 to a grandchild or great-grandchild
£1,000 to anyone else
Business relief. Allows a business to be passed on as a going concern by reducing the
Inheritance Tax on it by up to 100%.
•Agricultural relief. Allows a working farm to be passed on as a going concern without
paying Inheritance Tax on it.
Woodland relief. Allows the value of the timber (but not the land) exclude from your
estate. Whoever inherits the woodland may have to pay Inheritance Tax when they sell
the timber - unless it qualifies for Agricultural or Business Relief.
If the woodland also qualifies for Agricultural Relief or Business Relief it won’t qualify
for Woodland Relief.
Heritage relief. Allows exempt inheritance taxi in case of owning something of historic
or scientific interest such as building, lands and works of art.
50. 50
Stamp Duty Land Tax Rate
• You have to pay Stamp Duty Land Tax (SDLT) if you
buy a property in the UK over a certain price.
• SDLT rate depends on:
the purchase price of the property
whether the property is residential
whether the buyer is a corporate body
It may also be due if you lease a property
51. • Purchase Price of the property:
Previously charged at a single rate for the entire price
From 4 December 2014, at increasing rates for each portion of
the price
• Residential Properties:
nothing on the first £125,000 of the property price
2% on the next £125,000
5% on the next £675,000
10% on the next £575,000
12% on the rest (above £1.5 million)
51
Stamp Duty Land Tax Rate
52. • Corporate bodies:
SDLT is charged at 15% on residential properties costing more than
£500,000 bought by bodies like companies and collective investment
schemes
Can be change in rates when the property is used for property rental
business or property resale trade
Residential leases:
• If your residential lease premium (purchase price) is more than
£125,000, you will pay 1% SDLT on the amount above the £125,000
threshold.
52
Stamp Duty Land Tax Rate
53. Stamp Duty Land Tax
Penalty:
• within 3 months after the filing date the fixed penalty is £100
• more than 3 months after the filing date the fixed penalty is £200
Don’t file within 12 months, pay taxed-based penalty plus fixed penalty
Tax based penalty can be up to the full amount of the tax due on the return
• Reasonable excuse:
• Event prevented filling return yourself
• Event that prevented making arrangements for someone else
53