Overview of Tax Compliance in United Kingdom
The United Kingdom (UK) is a region of Europe comprising the four nations of England, Scotland, Wales, and Northern Ireland. It has a democratic parliamentary government renowned for its strong finance industry and stable economy. The UK tax system is set up to bring in money for the government to pay for infrastructure and public services. It consists of different taxes levied against people, companies, and organizations. The federal government, devolved governments, and local governments are all recipients of taxes in the United Kingdom. HM Revenue & Customs (HMRC) is the primary taxing authority. The UK, including England, Scotland, Wales, Northern Ireland, and a few smaller islands, collect taxes. Each region of the UK adheres to the same basic tax laws, while Scotland's legal system may result in some specific exceptions.
Who collects the tax in the United Kingdom?
The government organization in charge of overseeing and upholding tax regulations in the United Kingdom is called HM Revenue and Customs (HMRC). It is essential to ensure taxes are collected and tax laws are upheld nationwide. The main goal of HMRC is to raise money so that the government can pay for public services and infrastructure. It manages various tax-related tasks, including collecting income tax, national insurance payments, value-added tax (VAT), corporation tax, and other taxes imposed on individuals and corporations. The organization is in charge of managing tax administration and collection. It offers direction and assistance to taxpayers, enabling them to understand and comply with their tax duties. A powerful team of criminal investigators at HMRC, a law enforcement organization, investigates Serious Organized Fiscal Crime.
Various taxes in the UK
- Corporate Income Tax: UK companies must pay corporate income tax on the profits they generate annually. Both UK-based businesses and branches of international corporations operating there are included. The current corporate income tax rate is 25% for all limited enterprises. The rate before April 2023 was 19%. Co-ops, trade associations, housing associations, clubs, and other similar organizations not incorporated as corporations are also subject to this tax.
- VAT: Value-Added Tax (VAT) is a tax charged in the UK and included in the price of practically all products and services. If you bring in more than a specific amount of merchandise from overseas, this tax applies to those things. Most goods and services are subject to the regular VAT rate of 20%. Domestically produced gasoline, electricity, and a few other goods are taxed at a lower rate of 5%. Businesses must submit VAT returns consistently every three months to comply with VAT requirements. Larger businesses, however, can be required to submit monthly returns or make a head-of-month payment.
- Digital Service Tax: The government announced plans to enact a Digital Services Tax (DST) beginning in April 2020 in the 2018 Budget. This tax was implemented to ensure that digital enterprises paid taxes in line with the value of the benefits they received from their contacts with UK consumers. It was viewed as a stopgap until a global accord to restructure the corporation tax system was reached. In order to recognize the value that specific digital firms receive from the engagement of UK consumers, the DST will be applied at a rate of 2% beginning in April 2020. This action will be taken until a suitable international solution is found.
- Stamp Taxes:In the United Kingdom, a tax known as stamp duty is charged on specific transactions involving shares or real estate. When it comes to real estate transactions, it is often referred to as Stamp Duty Land Tax (SDLT). The stamp duty rates for residential real estate transactions are usually based on a tiered structure, where different rates are applied to certain portions of the property value. On documents that influence share sales, stamp duty is assessed at a rate of 0.5%. Bearer share transfers are subject to 1.5% stamp duty as well.
- Custom and Excise: Customs duties must be paid on various items brought into the UK from nations outside the European Union. The Common Customs Tariff of the European Union establishes these duty rates, which vary greatly depending on the particular imported items.
- Environmental Tax: To address issues with sustainability and the environment, the UK has imposed a number of environmental levies. The Landfill Tax, which is imposed on the disposal of waste in landfills; the Climate Change Levy, which is imposed on energy consumption; the Aggregates Levy, which is imposed on the extraction and importation of specific materials; the Carbon Reduction Commitment, which requires large corporations to increase energy efficiency, and the Plastic Packaging Tax, which is imposed on non-recycled plastic packaging, are some of these. These levies are intended to deter harmful behaviour, encourage sustainability, and reward eco-friendly alternatives.
- Airport Passenger Duty: The flight ticket cost is typically included in the charge that travellers must pay when flying out of the United Kingdom. These taxes are often paid by employers for their workers' business travel.
Tax Period in the UK
The period during which taxes are computed and paid is referred to as the tax year, often known as the fiscal year. Corporations can choose their accounting year, which is essential for calculating corporation tax, and it usually runs from April 1 through March 31, coinciding with the fiscal year. Remembering that a corporation's tax accounting period is limited to 12 months is crucial. As a result, a business that prepares statutory accounts for a period longer than 12 months must produce several corporation tax filings.
Return of Taxes in the UK
In the UK, taxpayers are expected to provide HM Revenue & Customs with a tax return that details their tax liabilities. These returns must be submitted electronically in a manner that the computer systems of the tax authorities can interpret. The system HM Revenue and Customs (HMRC) uses to collect income tax information is known as Self Assessment. Your UK tax return must be submitted by October 31 after the end of the tax year (6th April-5th April) or by January 31 if you want to file electronically.
Services offered by Enterslice
Our team of experts at Enterslice have years of experience and extensive expertise in offering tax compliance services to UK-based companies. We provide an all-inclusive solution to satisfy all of your tax-related obligations, serving as an easy one-stop shop for your company's requirements. Use our tax compliance services in the UK to benefit from the following benefits:
- Efficient Corporation Tax Filing: We will help you file your corporation taxes accurately and in accordance with all legal requirements with the appropriate UK tax authorities.
- Continuous Monitoring and Updates: To make sure your company stays abreast of the most current rules; our devoted team will proactively monitor and advise you of any changes or updates in the corporation tax filing requirements.
- Exemption Eligibility Assessment: We will assist you in determining if your company qualifies for any exemptions or reliefs under the UK corporate tax framework in order to minimize your tax obligations and improve your overall tax situation.
- Comprehensive Tax Understanding: Our professionals will walk you through the complexities of the taxation process and make sure you fully comprehend the numerous tax duties, due dates, and compliance standards that are unique to the UK. We want to equip you with the knowledge required to decide on taxes wisely for your company.
In the UK, Enterslice provides tax compliance services, providing complete solutions to businesses and individuals. Enterslice is dedicated to helping customers achieve their tax responsibilities while maximizing their tax status with its knowledge and experience in tax rules.