Tax in U.K. – VI


Business taxes

  • Corporate Tax – 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.
  • Business rates – It is the commonly used name of non-domestic rates, a rate or tax charged to occupiers of non-domestic property. Business rates form part of the funding for local government, and are collected by them, but rather than receipts being retained directly they are pooled centrally and then redistributed. 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

Business and Personal taxes

Some taxes are, depending on the circumstances, paid by both individuals and companies, and government

  1. National Insurance Contributions(NICs) – form a major source of revenue and are payable by employees, employers and the self-employed.
  2. Capital gains tax
  • Capital gains are subject to tax at 18 or 28 percent (for individuals) or at the applicable marginal rate of corporation tax (for companies).
  • The basic principle is the same for individuals and companies – the tax applies only on the disposal of a capital asset, and the amount of the gain is calculated as the difference between the disposal proceeds and the “base cost”, being the original purchase price plus allowable related expenditure.
  • Individuals are taxed at a flat rate of 18/28 percent with no indexation relief. However, if claiming Entrepreneurs’ Relief, the rate remains 10 percent. Capital losses from prior years can be brought forward.
  • Expenditure on a business (such as a property business) made by an individual can be claimed as an allowance against Capital Gains. Whether expenditure is claimable against income (potentially reducing income tax) or capital (potentially reducing capital gains tax) depends on whether there was improvement of the property: if there was none, it is against income; if there was some, then it is against capital.
  • Transfers between husband and wife or between civil partners do not crystallize a capital gain, but instead transfer the purchase price (book cost). Otherwise, transfers made as gifts are treated for CGT purposes as being made at the market value at the date of transfer.



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