* Taxes in the United

Kingdom
Iryna Honcharuk FIN-302
 *United Kingdom GDP
The Gross Domestic Product (GDP) in the United Kingdom was
worth 2647.90 billion US dollars in 2016. The GDP value of the
United Kingdom represents 4.27 percent of the world economy.
*United Kingdom GDP
Constant Prices
*United Kingdom GDP
Annual Growth Rate
 *United Kingdom GDP
per capita
The Gross Domestic Product per capita in the United Kingdom was last
recorded at 41602.98 US dollars in 2016. The GDP per Capita in the United
Kingdom is equivalent to 329 percent of the world's average.
 The GDP dynamics were positive. In
2013 GB’s GDP at constant prices totaled
1 791 billion pounds, and 1 845.4 billion
in 2014, which is 3.05% above the figure
of the previous year. In 2015 GDP totaled
1 888.7 bln. pounds, which is 2.35%
above 2014. GDP showed positive
growth of 1.94% in 2016 and 1.8% in
2017.
 *Taxation
Taxation in the United Kingdom may involve
payments to a minimum of three different levels
of government: the central government (Her
Majesty's Revenue and Customs), devolved
governments and local government.
Central government revenues come
primarily from:
•income tax,
•National Insurance contributions,
•value added tax,
•corporation tax
•fuel duty.
Local government revenues come
primarily from:
•grants from central government funds,
•business rates in England and Wales,
•Council Tax
•fees and charges (for example, on-street
parking).
 * Income tax: tax rates and fiscal role
Income Tax is a tax paid on Tax are not paid on things like:
personal income like: •interest on savings under
•money earned from savings allowance;
employment; •income from tax-exempt
•profits made of self- accounts, like Individual Savings
employment - including from Accounts (ISAs) and National
services sold through websites Savings Certificates;
or apps; •the first £5,000 of dividends
•some state benefits;
from company shares;
•most pensions, including state •some state benefits;
pensions, company and •premium bond or National
personal pensions and Lottery wins;
retirement annuities; •rent got from a lodger in house
•rental income;
that’s below the rent a room
•benefits from job;
limit.
•income from a trust.
Most people in the UK get a Personal Allowance of tax-free
income. This is the amount of income you can have before you
pay tax.
The amount of tax can also be reduced by tax reliefs if person
qualifies for them.
Income Tax paid in each tax year depends on:
•how much of income is above Personal Allowance;
•how much of income falls within each tax band.
Tax is paid on the amount of taxable income remaining after
allowances have been deducted.
 Table 6. Rates and bands of Income Tax for 2017/18 fiscal
year
Personal income tax is the largest source of the central
government revenues.

Tax rate on
Tax rate (other
Band dividends over Taxable income
income)
£5,000

Personal
0%
Allowance Up to £11 500
Basic rate 7.5% 20% £11,501–£45,000
Higher rate 32.5% 40% £45,001–£150,000
Additional 38.1%
45% Over £150,001
rate
 *Corporate tax: tax
rates and fiscal role
Corporation tax is a tax levied in the United Kingdom on
the profits made by companies and on the profits of
permanent establishments of non-UK resident companies and
associations that trade in the EU.
Corporation tax forms the fourth-largest source of
government revenue (after income, NIC, and VAT).
The Corporation Tax rate for company profits is 19%.
The costs of running business can be deducted from profits
before tax.
If company buys assets that will be kept to use in business, it can claim
capital allowances, for example:
•equipment;
•machinery;
•business vehicles, for example cars, vans, lorries.
You may be able to make a claim for:
•Research and Development (R&D) Relief;
•The Patent Box if your company makes a profit from patented
inventions;
•reliefs for creative industries (CITR) if your company makes a profit
from theatre, film, television, animation or video games;
•Disincorporation Relief if you’re closing your company and becoming
a sole trader, ordinary business partnership or limited partnership.
You can only claim Marginal Relief if your company had profits
between £300,000 and £1.5 million that were either:
•from before 1 April 2015;
from oil rights or extraction in the UK or UK continental shelf
 *Indirect taxes: types,
tax rates, fiscal role
•An indirect taxes are taxes collected by an intermediary (such
as a retail store) from the person who bears the ultimate
economic burden of the tax (such as the consumer).

Indirect taxes in Great Britain are:

• Value Added Tax;
• Stamp taxes;
• Environmental taxes;
• Specific industry taxes and schemes;
• Other business taxes.
The principal indirect tax is Value Added Tax. The UK standard
rate of 20 percent is broadly in line with the average EU standard
rate and is applied to both goods and services.
Stamp taxes apply to transfers of property. There are three types:
•Stamp duty – a flat rate of 0.5 per cent on instruments that
transfer stock or marketable securities.
•Stamp Duty Reserve Tax (SDRT) – a flat rate of 0.5 per cent that
applies to transfers of UK shares and related securities (including
options, interests and unit trusts) where no instrument of transfer
is executed. Loan stock is generally exempt from both stamp duty
and SDRT and there are special rules where UK shares are
effectively traded on non-UK stock markets.
•Stamp Duty Land Tax (SDLT) – this applies to acquisitions of
UK land (both freehold and leasehold) and is payable by the
purchaser. Rates vary, reaching four per cent on business property
worth over £500k. The rates on residential properties are the same
up to £1m, but increase for land worth more than this amount.
Stamp taxes are generally not applicable to intra-group
reorganisations. There are a number of taxes that apply to
specific industries. There are also local property taxes
known as Business Rates. These are set by central
government and collected by local authorities to pay for
local services. They depend on the value of the property
that is used for business purposes.
Business rates are a property tax, where each non-domestic
property is assessed with a rateable value, expressed in
pounds. The rateable value broadly represents the annual
rent the property could have been let for on a particular
valuation date according to a set of assumptions. The actual
bill payable is then calculated using a multiplier set by
central government, and applying any reliefs.
Environmental taxes are aimed principally at firms, in their
capacity as producers. HM Customs & Excise is responsible
for their efficient administration.
 The Landfill Tax obliges many producers of waste
products to pay a tax each time they take or send away
waste for dumping. The tax aims to encourage waste
producers to:
•produce less waste;
•recover more value from waste e.g. through recycling or
composting;
•use more environmentally friendly methods of waste
disposal.
 The Aggregates Levy is a response to the environmental costs
associated with quarrying operations (noise, dust, visual
intrusion, loss of amenity and damage to biodiversity). Its
objective is consistent with the government's statement of
intent to reduce demand for aggregates (e.g. crushed stone,
gravel, chips) and to encourage the use of alternative materials
and recycled materials wherever possible.
The Climate Change Levy is charged on businesses that supply
electricity, gas, coal and coke to industrial and commercial
consumers. It is imposed at the time of supply to industrial and
commercial consumers rather than at the time of consumption by
end-users. Its effect is to make energy suppliers think twice before
encouraging their customers to boost their own consumption of
energy. It represents an attempt to make producers less interested
in 'selling more' and more interested in encouraging their own
consumers to make the most efficient use of the energy supplies
that they already receive.
 *Local taxes: types
and fiscal role
Local taxes are:
•Business rates;
•Council tax;
•Local income tax.
Business rates are charged on most non-domestic properties, like:
•Shops;
•Offices;
•Pubs;
•Warehouses;
•Factories;
•holiday rental homes or guest houses.
•Business rates are worked out based on your property’s
‘rateable value’. This is its open market rental value on 1 April
2015, based on an estimate by the Valuation Office Agency
(VOA). Business rates are estimated by multiplying the rateable
value by the correct ‘multiplier’. Standard multiplier (47.9p) is
used if rateable value is £51,000 or more. Small business
multiplier (46.6p) is used if rateable value is below £51,000. Bill
will be reduced if your property’s eligible for business rates
relief.
You’ll usually have to pay Council Tax if you’re 18 or over
and own or rent a home. A full Council Tax bill is based on at
least 2 adults living in a home. Spouses and partners who live
together are jointly responsible for paying the bill. You’ll get
25% off your bill if you count as an adult for Council Tax and
either:
•you live on your own;
•no-one else in your home counts as an adult.
You’ll usually get a 50% discount if no-one living in your
home, including you, counts as an adult. You won’t have to
pay any Council Tax if everyone in your home, including
you, is a full-time student. Rates differs depending on region.
*The UK tax year
The UK tax year dates are set from
6 April of one calendar year to 5
April of the subsequent year. Thus
UK tax years are often notated such
as 2016/17 for the current tax year.
 *Conclusion
•So, basic UK taxes include income taxes, property
taxes, capital gains taxes, inheritance taxes and Value
Added Tax. Many of these taxes are stratified based
on the payer’s assumed ability to pay – higher
income persons are assumed to be able to pay at
higher rates.
•One interesting aspect of UK tax is that it treats
spouses as separate entities and taxes them as
individuals, with the exception of a small allowance
for the purpose of income taxes.
•Some of the UK’s tax system is progressive and takes a
bigger percent of income from higher earners. The UK’s
income tax system is progressive. For earners over
£150,000 there is a marginal tax rate of 45%.
•At 20% VAT tends to be more regressive. People on low
income have a higher marginal propensity to consume. But
regressive nature of VAT is slightly compensated by the fact
that in theory, necessities like food (e.g. cold pastries,
cabbages) don’t have VAT. VAT is supposed to be targeted
at luxury goods.
•The government is in the process of replacing tax credits
(and other means-tested benefits for those of working
age) with a unified payment called universal credit, though
roll-out of this system has been persistently delayed.
Thank you for attention!