U.K. Tax Laws and Tax System

U.K. Tax Rates 2013-14

Last partial update, April 2013

Individual Income Tax: The U.K. individual income tax rates for 2013-14 are 10%-45%.

U.K. Personal annual tax rates 2013-14

Income (GBP)	%
1-2,790	10
1-32,010	20
32,011-150,000	40
Over 150,000	45

Note:
The 10% rate relates to saving income of up to GBP 2,790.
Dividend income below GBP 34,371 is taxed at 10%. Dividend income of GBP 34,371 - GBP 150,000 is taxed at 32.5%.
Dividend income exceeding GBP 150,000 is taxed at 37.5% .

Corporate Tax: UK's corporate tax rate for 2013-14 for income exceeding GBP 1,500,000 is 23% compared to the previous 24% rate.
For UK resident companies with annual profits below GBP 300,000 the tax rate is 20%.
From April 1, 2015 a 20% tax rate will apply to all companies.

Capital Gains: Capital gains of individuals are generally taxed at 18%. There is an annual exemption of GBP 10,900.
Capital gains for companies are generally taxed at the standard corporate tax rate.
There is a participation exemption for sale of shares, subject to certain terms.

Residence

An individual in UK is resident when staying in the UK for more than 183 days in a tax year, or when having annual visits to the UK for 91 days in 4 consecutive years.
A company is UK resident if incorporated in the UK, or when the management is in the UK.

U.K. Tax Deductions

Losses are carried forward indefinitely. Losses can be carried back for one year.
A company holding 75% in a subsidiary can usually file a consolidated tax return.
Depreciation is deducted using the reducing balance method.
The depreciation rate for machinary and equipment is 25%. Industrial buildings are depreciated on a straight line method , 4% per year.
Companies involved in enterprise zones can claim 100% depreciation for commercial buildings.

U.K. Personal Credits and Deductions

For British residents, the first annual income of GBP 9,440 is tax exempt in 2013-14. The exemption is limited to annual income below GBP 100,00.
There are also tax credits for taxpayers aged 65-74, with GBP 10,660 credit for those above 75 years.
There is a standard deduction for each dependant.
Deductions are also permitted for pension plans payments by an employee.
There is a tax relief for gifts given to UK charities.

Deduction of Tax at Source in U.K.

In the U.K. tax is deducted at source from the following payments to non residents:
Dividend- 0%. (20% for dividends paid by REITs).
Interest- 20%.
Royalties- 20%.

Note: Witholding rates are subject to double taxation treaties.
Interest and royalties are exempt under the EU directive.

Social Security in U.K.

National Insurance Contributions (NIC) in the UK.
The contributions by the employer and the employee are subject to to ceiling defined by law.

Employer: 13.8% on salary above GBP 7,755.
Employee: 12% on annual salary of GBP 7,755- GBP 41,450, with additional 2% for salary above GBP 41,450.
Self employed pay 9% for income of GBP 7,755- GBP 41,450 with additional 2% on income exceeding GBP 41,450

You can find useful info in HM Revenue & Customs site hmrc.gov.uk

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