Summary of UK taxes

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Your guide to the main taxes in the United Kingdom

In the UK, 74% of government income is generated from Income tax and National Insurance Contributions and VAT (including insurance tax premium).

Income tax

Income tax is the largest earner for the government and makes up 31% of government income. It is charged on;

  • Salaries & benefits from employment
  • Rental income from land & buildings
  • Interest from banks & building societies
  • Dividend from companies 
  • Profit from trade, profession or vocation
These “pots” of income are taxed differently and you will need to collect and classify them with your so the details can be used to calculate your tax position and also complete your personal tax return. This method of self declaration of income & tax position is known as “Self Assessment”.

National Insurance Contributions (NIC)

NIC is the second largest earner with 22% of government revenue. NIC arises from

  • Both employees and employers from employment icome & benefits
  • Profits from self employment

Valued Added Tax (VAT) & Insurance Premium Tax

Value added Tax (and insurance premium Tax) 21%. VAT is charged by businesses to customers on supplies of goods or services in the UK.

These 3 categories make up 74% of government income.

Corporation Tax (Including bank levy)

Corporation tax (Including bank levy)  – Paid by UK companies on their Taxable income

Duties;

Taxes on alcohol, petrol, tobacco as well as certain levies on goods coming into the UK

Capital Taxes & Green Taxes

Capital Taxes and Green Taxes, Capital taxes are CGT, Annual Tax on enveloped Dwellings (ATED), Inheritance Tax (IHT), Stamp Duty (SD) and SDLT. Green taxes include aggregate levy and air passenger duty.

One Comment
  1. Awesome post! Keep up the great work! 🙂

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