UK Income Tax Returns
UK Non Residents Capital Gains Tax Returns and Resources
Other UK Tax Returns and Resources
UK Business Formations and Company Secretarial Service
A detailed review of most other UK Taxes (ie taxes not included elsewhere on this site), such as Insurance Premium Tax, Stamp, Land and Petroleum Revenue Taxes, Environmental Taxes, Climate Change and Aggregates Levy and Landfill Tax, and Customs and Excise Duties is beyond the scope of this website.
However, there are a couple of other UK Taxes that might be of interest to our visitors: VAT and Inheritance Tax.
VAT is included in the cost of most goods and services in the UK. There are three rates of VAT:
Any other goods or services, such as Insurance, are exempt from VAT.
VAT is collected by VAT registered businesses and paid over to HMRC, less the VAT element on purchases and/or expenses that has been incurred.
Example
Joe Ltd, an electronics retailer, sells a laptop to Rodney for GBP1,200 (inc VAT). Joe Ltd originally purchased the laptop from Dean plc for GBP1,080.
VAT on the sale made to Rodney, at the standard rate of 20%, amounts to GBP200. This is known as Output Tax. VAT on the purchase from Dean plc, at the standard rate of 20%, amounted to GBP180. This is known as Input Tax.
On this transaction, Joe Ltd will pay GBP20 to HM Revenue and Customs. This is the Output Tax on sales of GBP200 less the Input Tax incurred on the purchase from Dean plc of GBP180.
VAT on the sale made by Dean plc to Joe Ltd, at the standard rate of 20%, amounts to GBP180 less any VAT that it has incurred in manufacturing or purchasing the laptop. If no VAT Input Tax was incurred, then Dean plc will pay GBP180 to HM Revenue and Customs.
As can be seen, total VAT of GBP200 (GBP20 from Joe Ltd and GBP180 from Dean plc) will be paid to HM Revenue and Customs. This is the same amount of VAT incurred by Rodney, the end consumer, on his purchase of GBP1,200 (inc VAT ie GBP1,000 plus VAT of GBP200).
A business must register for VAT if its taxable turnover is greater than GBP85,000.
A business may voluntarily register for VAT if its turnover is less than this amount. It can then reclaim VAT incurred on purchases and/or expenses.
Most VAT administration is now performed online as part of the UK Making Tax Digital (MTD) system.
Most businesses can register for VAT online, creating a VAT online account, also known as a Government Gateway account. Software will then enable the VAT registered business to complete periodic VAT Returns through their online account.
HM Revenue and Customs (HMRC) also operates the VAT Flat Rate Scheme, designed to simplify VAT for smaller businesses with turnovers less than GBP150,000. Once registered for this scheme, HMRC issues a VAT percentage rate that must be applied to gross taxable turnover (gross sales). This amount is then paid over to HMRC. The percentage rate is dependant on the type of industry that the business operates in. VAT is still charged to customers at the standard rate of 20%, unless another rate applies. Usually, there is a small tax advantage in using the VAT Flat Rate Scheme.
If you need to register your business for Value Added Tax, or simply want some more detail, click here to open our contact page in a new window. You can then fill in some details, write a short comment, and we will get back to you as soon as possible. You can close the window and you will be back on this page.
Inheritance Tax is a tax on the property, money and possessions (otherwise known as the estate) of an individual who has died. It is only due if the estate of the deceased individual is greater than GBP325,000, unless the estate is, in its entirety, left to the individual’s spouse, civil partner, a charity, or a community amateur sports club. In this case, even if the value of the estate is greater than GBP325,000, no Inheritance Tax is due.
If the deceased individual gives their home away to their children or grandchildren (including adopted, fostered or step children), then the threshold for Inheritance Tax is increased to GBP500,000.
If an individual dies and the value of their estate is less than the GBP325,000 (or GBP500,000 if their house is given away, as detailed above) threshold, then any unused threshold can be added to their spouse’s or civil partner’s threshold.
The standard rate of Inheritance Tax is 40%, and is charged on the entire estate value greater than the threshold.
Example
The estate of Mr Jackson is valued at GBP400,000. Assuming that he did not leave his estate to his spouse or civil partner, and he didn’t give his house away to his children etc (as detailed above), then Inheritance Tax will be calculated on an estate value of GBP75,000 (ie GBP400,000 estate value less GBP325,000 standard threshold).
Inheritance Tax due will be GBP30,000 (ie GBP75,000 @ 40% standard rate of IHT).
Inheritance Tax is paid to HM Revenue and Customs by the executor(s) of the deceased estate. It is paid from the available funds of estate. The Beneficiaries of the estate do not normally pay Inheritance Tax.
If you need some help with Inheritance Tax Tax, or simply want some more detail, click here to open our contact page in a new window. You can then fill in some details, write a short comment, and click 'Submit'. You can then close the window and you will be back on this page. We will get back to you as soon as possible.