What are different types of Taxes in the UK?

4 min read

The concept and types of taxes can be very confusing for people in the UK. If you are one of those who find it difficult to understand what taxes mean in relation to your finances, you can hire an accountant. Accountants in the UK have the necessary knowledge to help you understand and make decisions about your finances. By knowing your taxes better, you are able to plan how you will spend your money in the future. Also, if you think that you may have overlooked any UK tax obligations, an accountancy firm can help you resolve it for you.

Various Types of Taxes 

A tax is an obligation or charge imposed upon a citizen by a government in order to finance various public services and government spending. Various types of taxes include personal taxes, estate taxes, national taxes, stamp duties, and many more. These taxes are collected by governments at different levels including the federal level, provincial level, municipal, and regional. Excise taxes, on the other hand, are duties or charges that are unrelated to the revenue. For example, customs duties are related to importers, exporters, and traders. The rate of duty varies from one locale to another.

Income, Wealth, and Property Taxes 

These are basically the same as in the US, except for the brackets, which tend to be smaller in the UK. These taxes are normally levied according to your net gain or loss, which is defined as your after-tax income or asset. In addition to income taxes, there are also other kinds of taxes such as capital gains taxes and dividends, which are normally charged on the basis of capital gains. There are two broad classes of taxable individuals, namely, those who earn their income through salaries and wages, and those who earn their income through inheritances and dividends.

Indirect Taxes are Personal and Corporate Taxes

The two most common forms of indirect taxes are personal and corporate taxes. Examples of personal taxes are income taxes, inheritance taxes, property taxes, and payroll taxes. On the other hand, corporate taxes are payable by businesses and corporations to the government. Examples of direct taxes are fuel tax, sales tax, value-added tax, and property tax.

Governments Levy Taxes

All governments levy taxes at some point of time. When the government collects a certain amount of money from its citizens for the general welfare of the nation, the governments then decide what type of tax to levy. The two types of taxes which the governments usually levy are personal and corporate. Each of these taxes has a unique set of rules and circumstances that would determine how it is collected from the citizens.

Personal Taxes

One way to collect revenue from its citizens is through personal taxes. These taxes are usually collected from the individuals directly through their annual salary or wage, and from the government by way of compulsory annual increases in the price of certain goods and services. Excise taxes, on the other hand, are collected from companies or corporations by the government for an extra amount. Some examples of excise duty are customs and tariffs.

VAT

A company will be taxed for the value of the goods and services sold, irrespective of whether the retailer makes a profit or not. However, if a retailer does make a profit, then he will be liable to pay tax on that extra amount that was earned by him. Companies may also be liable to pay taxes levied on exports of goods to other countries.

How do You Find a Tax Haven?

“You just need to start by looking for a company that specializes in connecting European suppliers with Asian importers or exporters,” says Dong. “Many such companies will already have accreditation with the authorities in either the UK or the US.” In addition to ensuring that your business receives the most favorable rates possible, they will also ensure that the duty charged is the least onerous in your particular country. This, he says, is “the key to making sure that your goods are shipped as cheaply as possible.”

Corporate Taxes

Corporate taxes are collected by the government by way of compulsory payments. Examples of these compulsory payments are the property taxes, which include taxes on tangible assets such as land, building, and machinery. Another type of tax is the corporate tax, which is normally collected by way of annual return and is collected by the corporate body of the company. The payment of this tax is made by the shareholders of the company. However, there are states that allow municipalities to levy property taxes directly.

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