Her Majesty Revenue and Customs (HMRC) deals with the taxes compliance and registration for individuals and companies.
The taxation system varies from the corporate tax to the income based on the people. HMRC is also in charge of the pensions, rents, dividends and another kind of financial income. The amount taxable income for individuals is calculated on the British fiscal year that begins on April 6 and ends on 5 of the following year. The tax submission can be in two different ways: through a self-declaration, or through a system called “Pay as you Earn (PAYE), which is part of the HMRC system.
The former allows the taxpayer to provide all the details related to the income (by filling a declaration showing earning details, and the taxable amount to be paid). The latter, instead, allows the HMRC to deduct the taxes directly from the payslip, which will be a percentage of the income.
The income from employment and self-employment is also subordinate to National Insurance Contribution (public pension). It is used to cover pension contributions, and it includes both businesses and workers, although at different rates, which vary according to Government standards.
For companies, the British system has the Corporation Tax in place, which is the tax established on corporate profits. This system is considered the primary source of earning from the government and it covers more than 90% of the tax revenue.
Another charge to be considered is the Value Added Tax. The VAT is an indirect tax and it is applied to product and services as well as on hiring or loaning goods to someone or selling a business. The VAT is 20% for standard goods and services. However, this can vary if a company is selling materials that contribute to energy savings or if there are conversion processes of buildings from private to commercial use or conversely.
Specifically, the UK taxation system is divided into direct and indirect taxes.
The Direct Taxes (Direct taxes) include:
• The Income tax;
• National Insurance Contribution;
• Corporation tax;
• Inheritance tax;
• Capital gains tax;
Indirect taxes apply to:
• Stamp duty;
• Stamp land duty;
• Customs duty.
Another significant aspect to consider is that the UK tax system is far more flexible and understandable than any other in Europe. Also, it offers a broad range of benefits to companies ready to invest and settle in Britain. For further information, please contact us.