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Taxation in the United Kingdom may comprehend taxes to at least two distinct levels of government the local government and central government (HM Revenue & Customs). The central government uses the funds grants, business rates, council tax, incomes from fees and charges such as those from on-street parking to finance to Local government. The revenues of the central government are particularly income taxes, national insurance contributions, value added taxes, corporation taxes and fuel duty.

A direct proportional tax (currently 10% for employees) taken off the salary of those people in employment. Employers also provide contributions for each worker they employ.

Income tax
Income tax is a direct tax on all incomes received by private individuals after certain concessions are made. Income tax is a progressive tax. This means that when the salary raises, the proportion or percentage of income paid in taxation rises too. In the UK the lowest rate of income tax is 10 per cent, the basic rate is 22% and the highest is 40 per cent. A direct tax is a tax whose effect cannot be changed to someone else. This is in contrast to an indirect tax. Everyone has a non-taxable allowance.

Capital Gains tax
Capital Gains Tax UK affects individuals rather than businesses, and it is assigned to increase in the value of assets such as property, possessions and shares. Capital Gains tax is a tax that affects the increase in value of certain assets when they are sold compared with their value when they were bought. For example, any increase in the value of shares at the time of sale is subject to capital gains tax.

Inheritance Tax
Inheritance Tax is a charge that affects the value of the goods transferred from one person to another during a person's lifetime or death. Inheritance Tax is the tax that is paid on your 'estate'. Generally this tax affects all your assets at the time of your death, less what you owe. It's also applied to the assets you may have given away during your lifetime. Assets comprehend things like property, possessions, money and investments.

Corporation tax
The fourth largest origin of government revenues is corporation tax, it affects the profits and chargeable gains of companies. Companies that work in the UK are affected by the corporation tax on their profits (income plus gains) arising in an accounting period. An accounting period lasts 12 months. The main rate is 30%, which is imposed on taxable income above 1.5m. In 2005-06, income below this level was taxed at 0% and 19%, but with marginal reliefs in between the bands. The 0% starting rate has been annulled with effect from 1 April 2006.

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