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UK

Financial Year – 5 April – 6 April
Currency – Pound sterling (GBP)

Corporate Tax Summary

Residence – A company is UK resident if it is incorporated in the UK or its place of central management and control is in the UK. A company not incorporated in the UK will be liable to UK corporation tax when it does business in the UK.

Basis of Taxation – Resident companies are taxed on worldwide income and gains with credit given on any foreign tax incurred. A non-resident company will be liable to UK corporation tax only if it carries out trade through a permanent establishment in the UK. Tax rates and treatment are the same for companies and branches of foreign companies.

Reference
Corporate Income Tax Rate (%) 19%
Branch Tax Rate (%) 19%
Withholding Tax Rate:
Dividends – Franked 0% A dividend exception applies to most dividends and distributions. Dividends received by a resident company (other than a small company) will be exempt. The exemption also applies to dividends received by a small company from non-resident companies from a territory with whom the UK has a double taxation treaty that includes a non-discrimination clause. A withholding tax of 20% will apply on dividends paid to non-resident companies on Property Income Dividends (PIDs) for Real Estate Investment Trusts (REITs) and Property Authorised Investment Funds (PAIFs).
Dividends – Unfranked 0%
Dividends – Conduit Foreign Income 0%
Interest 20% Interest paid to individuals or non-resident companies is subject to 20% withholding tax, unless the withholding tax rate is reduced or eliminated under a double taxation treaty.
Royalties from Intellectual Property 20% Royalties paid to individuals or non-resident companies are subject to 20% withholding tax, unless the withholding tax rate is reduced or eliminated under a double taxation treaty.
Fund Payments from Managed Investment Trusts 0%
Branch Remittance Tax 0%
Net Operating Losses (Years)
Carry back 12 months
Carry forward Indefinite (or group relieved)

Individual Tax Summary

Residence – Taxpayers who are resident in the UK in a tax year are taxable on their worldwide income and capital gains arising that year, while taxpayers who are NOT resident in the UK in a tax year are only taxable on their UK income arising in that year (their foreign income is not taxed). Subject to limited exceptions, non-residents do not pay capital gains tax.

The residence of an individual is determined according to the Statutory Residence Rules.

Basis of Taxation – UK resident taxpayers are taxed on their worldwide income and gains, with a tax credit available for the foreign tax paid on foreign income, up to the amount of UK tax payable on that income. Non UK tax residents are taxed only on their UK-source income. Residents who qualify as non UK domicile may elect to be taxed under the remittance basis of taxation to include only non UK sources of income remitted to the UK.

Filing Status – Each taxpayer must file a separate return each financial year; joint returns are not permitted.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
Up to £12,500 0
£12,501 – £50,000 20
£50,001 – £150,000 40
Above £150,000 45% 45%

In addition to personal income tax, individuals will be subject to National Insurance contributions of 9% on trading profits above £9,500 and up to £50,000 and 2% above £50,000.

Goods and Services Tax (GST)

Rate 20% (5% reduced rate)
Taxable Transactions Value Added Tax applies to most sales of goods, the provision of services and imports.
Registration Registration is compulsory for businesses whose taxable supplies exceed £85,000 in a cumulative 12-month period or where a business expects that its taxable supplies will exceed this threshold within the next 30 days. Voluntary registration is possible for businesses making taxable supplies below this threshold.
Filing and Payment VAT returns are generally due on a quarterly basis, although monthly and annual submissions are allowed. A surcharge may be imposed for late filing or payment of VAT.

Other Taxes Payable

Tax Reference
Payroll Tax Employers are required to withhold tax on employees earnings under PAYE and employers and employees National Insurance contributions.
Payroll Tax Stamp Duty at o.5% applies on the transfer of UK shares and is payable by the transferee.
Land Tax Stamp Duty Land Tax is charged on transfers of property (residential and commercial). For residential properties the SDLT rates are between 0% and 12% (increased to 15%) depending on the value of the property. The rates for commercial property are 0% to 5% although a 15% rate applies to purchases of residential properties of more than £500,000.

Last updated: 12.06.2020