UK Tax Laws: An Overview
The UK tax system is complex and can be confusing for individuals and businesses alike. This article provides an overview of the different types of taxes in the UK, as well as some of the key rules and regulations that apply.
Income Tax: A Flat Rate for All
Income tax is the most common form of taxation in the UK, and is paid by most individuals. The rate of income tax is a flat rate of 20% on all earnings over £11,500 per year. This rate applies to all income, regardless of the source, and is paid directly to HMRC.
Value Added Tax: A Tax on Goods and Services
Value Added Tax (VAT) is a tax on goods and services that is charged at a rate of 20%. VAT is charged on the majority of goods and services in the UK, and is paid by consumers when they purchase goods and services. Businesses are required to collect the VAT from customers and pay it to HMRC.
Corporation Tax: A Tax on Company Profits
Corporation Tax is a tax on the profits of companies and other organisations in the UK. The rate of Corporation Tax depends on the size of the company, but is generally 20%. Companies are required to pay Corporation Tax on any profits they make, and must submit a tax return to HMRC each year.
Stamp Duty: A Tax on Property Transactions
Stamp Duty is a tax on property transactions in the UK. The rate of Stamp Duty depends on the value of the property, but is generally 2-3%. Stamp Duty is paid by the buyer of the property, and must be paid to HMRC before the completion of the transaction.
Inheritance Tax: A Tax on Inherited Wealth
Inheritance Tax is a tax on inherited wealth, and is charged at a rate of 40%. Inheritance Tax is paid by the beneficiaries of an estate, and must be paid to HMRC before the estate can be distributed.
National Insurance Contributions: A Tax on Earnings
National Insurance Contributions are a tax on earnings, and are paid by both employees and employers. Employees are required to pay National Insurance Contributions of 12% on their earnings, and employers are required to pay 13.8% on their employees’ earnings. This money is then used to fund the UK’s social security system.