The UK is known to be the most strict when it comes to the UK tax. Also, the tax code is the longest in the UK. The tax system is a little complex due to certain facts, however, it tends to be the most straightforward system in the works as well. The main reason the UK tax system appears to be unique is that even the spouses are considered as separate entities when it comes to the obligations of the tax. This is why all individuals whether they are married, in a civil partnership, or single will come under the same tax liabilities. In some cases, a little exception is also observed in this regard. This makes several beginners wonder about what are the main types of taxes in the UK.
If you are wondering about the facts of tax as a resident of the UK, this comprehensive guide is for you. The discussion will hold the relevant information about what happens if you do not pay tax in a correct manner, and what are the main types of taxes that you are liable to pay in the UK. Let us get further delved into the discussion to gather more information.
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What Happens If You Don’t File Your Taxes Correctly?
Knowing the seriousness of the tax implications in the UK, this is imperative to mention here that HMRC will have the information regarding your earnings and what tax you have paid on this amount. However, if there are multiple sources and you are learning through other means, immediately declare the income by doing the self-assessment tax returns.
Whether the other source of income is by selling the properties, giving your house for renting, or maybe selling through online mediums. In case the income you are earning from multiple sources is more than the amount of your personal allowance, you will have to deal with the tax implications in the UK.
Here are the Main Types of Taxes in the UK
Income Tax
This is the type of tax that is implemented on the personal income that an individual is earning in the UK. How much income tax you will have to pay depends on the facts regarding how much is your income and which tax band belongs to you.
How much you earn over the amount of your personal amount will also be considered in the matter of income tax implications. The taxpayers have the permission to earn a certain amount of income before and after that limit another tax band will be implemented according to the increase in income.
National Insurance Contributions
National insurance contributions are paid for the benefits like state pensions and others. If an individual has turned 16 and earns over a certain limit per week or is self-employed and earning over a certain limit, a national insurance contribution will be implemented.
Moreover, there are different classes that come under the obligation of national insurance contributions. This explains that every individual will pay a different amount in the form of national insurance contributions according to their unique circumstances. The employment status of people and the amount of earnings play a vital role in deciding the amount of national insurance contributions.
Value Added Tax (VAT)
Value-added tax is known to be the consumption tax. This happens to be one of the largest sources for the government to gather revenue. However, this comes after the income tax and national insurance contribution.
Excise Duties
Excise duty is a charge when someone is dealing with tobacco, alcohol, betting etc. This is also known to be working as an indirect tax just similar to the value-added tax in the UK.
Corporation Tax
If you are gaining profit from the company, you will have to pay the corporation tax. Also when you are carrying out business activities through a limited company, club corporation, or a foreign company that has a branch in the UK.
It also depends on the size of profits you are learning through the business activities, which will help to decide how much amount you will have to pay in the form of corporation tax. This kind of tax is normally paid even before the tax returns are filed for your company. Because of this act, there are two accounting periods in several companies.
Stamp Duty
SDLT is known as the stamp duty land tax in the UK. If you are in Northern Ireland, Wales, or England and you tend to buy a property that is over the market of a certain limit, you will have to pay the stamp duty land tax. In case of the beginners who are into buying the main house for the first time, a few discounts and certain offers are given to support the idea of the first house. In some cases, the tax implications are not implemented at all.
The Bottom Line
Now that you have gathered a fair amount of information regarding what are the main types of taxes in the UK, we can bring the discussion towards wrapping up. The main types of taxes in the UK are indeed a great source for the government to gather enough resources for the betterment of the citizens and mend the problems of society. This brings in the requirement of seriousness for UK residents in terms of tax obligations. We hope these few minutes of reading will help you better understand the main types of taxes that are possibly implemented in UK residents and how to handle them in a tax-efficient manner.
Get in touch with our young, clever, and tech-driven professionals if you want to choose the solution to accounting problems in the UK for your income. We will ensure to offer the best services.
Disclaimer: The information about the main types of taxes in the UK provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.