Taxation in United Kingdom

1. TAXATION in UK
Performed by:
Sanjog Zimbar

2. Content
• Introduction
• History
• Direct Taxes
• Indirect Taxes
• Sources of UK government Tax revenue
• Income Tax in UK
• VAT in UK
• Corporation tax
• Exemption on Investment

3. Introduction
• The UK have a rich history going back thousands of
years.
• United Kingdom includes nations England, Scotland,
Wales and Northern Ireland.
• Theresa Mary May is the Prime Minister of the
United Kingdom from July, 2016 and Leader of the
Conservative Party.
• In UK there is indirect democracy.
• The history is full of invaders, wars, rulers.

4. History
• levied on persons or property subject to the government,
with the primary purpose of raising revenue.
• Tax system started by King John in 1203 as Export tax on
wool.
• In 1275 Wine tax, 1572 Poor law tax, 1667 Coal tax, 1692
Land tax,
• In May 1707 Window tax, 1798 Income tax introduced by
William pitt (1/120 on income over £60).
• In 1973 VAT is 10% good & services

5. Direct Taxes
It is levied on Income wealth and profit.
Direct Taxes Include;
• Income Tax
• Corporation Tax
• Capital Gains Tax
• National Insurance Contributions
• Stamp duty- Transfer of shares & securities @0.5 to 4
• Inheritance Tax
• Burden of direct tax cannot be passed.

6. Indirect Taxes
Indirect taxes are taxes on spending.
Indirect taxes includes;
• VAT
• Customs Duty
• Excise Duties- on fuel, cigarettes & alcohol
• Insurance Premium Tax
• Environmental taxes, including Air Passenger Duty
• Landfill Tax
Producers may be able to pass on indirect tax depending on
price elasticity of demand and supply.

7. Sources of UK Government Tax Revenue in 2015-2016
• Income Tax- £170 billion
• VAT - £ 133 billion
• National Insurance Contribution - £ 115 billion
• Other Taxes- £ 65 billion
• Excise duty - £ 47 billion
• Corporation Tax- £ 42 billion
• Council Tax - £ 28 billion
• Business rates - £ 28 billion

8. Composition of Revenue

9. Income Tax in UK
Basics of Income Tax-
• Tax free allowance per person = £10,600
• Taxable income= Gross income – Tax allowance
Tax rates at different levels
• £10,601 to £31,785 – marginal rate 20%
• £31,786 to £150,000 – marginal rate 40%
• Above £150,000 marginal rate 45%
Personal allowance is removed at a rate of 50% per
extra £1 earned on incomes over £100,000 a year.

10. Value Added Tax (VAT)
• Standard rate of VAT is 20% since 2011.
• Reduced rate 5% is applied to following items:
_ Domestic fuel and power, contraceptives, women’s sanitary
product, children’s car seat etc.
• VAT rate 0% on these items:
_Food, Construction of new buildings, domestic passenger
transport, cycle helmet etc.
• Exempt from VAT
_Private education, rent on domestic dwelling, health service,
postal service, small traders etc.

11. Corporation Tax
• From 1 April 2015 there is a single Corporation Tax
rate of 20% for non-ring fence profits.
• Government announced reduction to the
Corporation Tax main rate at regular interval of time;
• Summer budget 2015; 19% from 1 April 2017, 2018
and 2019, 18% for year2020.
• Budget 2016; 17% for year 2020.

12. Exemption on Investment
• UK government bonds.
• National saving & Investment
• Pension funds
• Venture capital trust
• Enterprise investment schemes
• Insurance bond

13. Summary
• Some successful attempts to reform the tax system in
recent years, but still many areas in need of reform.
• Debatable to what extent tax and benefit reforms are
responsible for increased inequality.
• Tax and benefit changes have improved the incentive
to work at all, but left effective marginal tax rates
unchanged overall.

14. THANK YOU…!