In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information
A company is considered resident for tax purposes if it is incorporated in the UK or if its place of central management and control is in the UK.
A foreign company will be deemed to have a permanent establishment in the United Kingdom if:
Main corporate income tax rate, not applicable to profits from oil rights and extraction |
|
Taxable profites attributed to the use of patents | 10% |
Diverted profits tax | 31%, applies if multinational companies use artificial arrangements to divert profits overseas in order to avoid UK taxes (55% in the case of UK ring fence operations, mostly for oil extraction) |
United Kingdom | OECD | United States | Germany | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 9.0 | 10.1 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 114.0 | 163.6 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 30.6 | 41.6 | 36.6 | 48.8 |
Source: The World Bank - Doing Business, Latest data available.
Some goods and services are zero-rated: books, newspapers and periodicals (also in a digital format); certain foodstuffs; children’s clothing and footwear; drugs and medicines supplied by prescription; new housing; transport services; exports of goods and related services; certain international services; intra-Community supplies of goods; services supplied to customers outside the EU (an exempt-with-credit supply); etc.
For further details, you can consult the VAT guide of the HM Revenue & Customs, which also provides information on the VAT measures taken by the UK government in light of Brexit. In fact, since it left the EU the UK is free to adopt its own VAT rules, with the exception of Northern Ireland, which will operate a “dual”/”mixed” VAT regime and, for the time being, follows EU VAT rules for goods and UK VAT rules for services.
There are several environmental taxes, including a Landfill tax, a Climate change levy and an Aggregates levy.
Individuals leaving the United Kingdom by air are required to pay a duty, which is generally included in the cost of the air ticket.
Income tax rate 2023/24 |
Progressive rate up to 45% |
GBP 0 - 12,570 | 0% |
GBP 12,570 - 37,700 | 20% (Basic rate) |
GBP 37,701 - 125,140 | 40% (Higher rate) |
Over GBP 125,140 | 45% (Additional rate) |
Dividend income | The tax free dividend allowance for the 2023/24 financial year has been halved from GBP 2,000 in 2022/23 to GBP 1,000. |
GBP 0 - 12,570 | 0% |
GBP 12,571 - 37,700 | 8.75% |
GBP 37,701 - 125,140 | 33.75% |
Over GBP 125,140 | 39.35% |
Necessary business expenses can be deducted from employment income and are not taxable if paid for or reimbursed by the employer.
Expenses that do not qualify for tax relief include: alimony, medical expenses, social security contributions, council tax and other UK taxes, most insurance premiums, mortgage interest payments (some relief for commercially let properties), fines and penalties (except for fines, such as parking penalties, incurred in the course of a trade), contingent liabilities.
For further information, consult the guide of the UK Government.
Residents who are not domiciled or deemed domiciled in the UK may make a claim for the remittance basis of taxation to apply to overseas income, in exchange for an additional tax liability of GBP 30,000 per annum for taxpayers who have been UK residents for seven out of the previous nine tax years, rising to GBP 60,000 once resident for twelve out of the previous fourteen tax years. Click here for more information.
Expatriate allowances are included in taxable income but may be available for exemption for certain subsistence expenses.
Rates can be lower as part of a tax treaty.
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Latest Update: March 2024