Inventory of Taxes in the EU Produced by the European Commission Directorate-general Taxation & Customs Union (Information: mailto: [email protected]) UNITED KINGDOM Situation 1/8/2001 The data in the Inventory has been provided by the Tax administration of the Member States Table of contents UK 1.1. Income tax........................................................................................................................3 UK 1.2. Income tax — employment income..................................................................................5 UK 1.3. Corporation tax................................................................................................................6 UK 1.4. Petroleum revenue tax (PRT) ..........................................................................................8 UK 1.5. Taxes on capital gains....................................................................................................10 UK 1.6. Vehicle excise duty (VED) .............................................................................................12 UK 2.1. Inheritance tax...............................................................................................................14 UK 3.1.1. Value-added tax .............................................................................................................16 UK 3.1.2. Excise duty on hydrocarbon oil .....................................................................................18 UK 3.1.3. Excise duty on tobacco products....................................................................................20 UK 3.1.4. Excise duty on spirits .....................................................................................................21 UK 3.1.5. Excise duty on wines and made-wines...........................................................................22 UK 3.1.6. Excise duty on cider and perry......................................................................................24 UK 3.1.7. Excise duty on beer ........................................................................................................25 UK 3.2.1. General and pool betting duties.....................................................................................26 UK 3.2.2. Bingo duty ......................................................................................................................27 UK 3.2.3. Gaming duty...................................................................................................................28 UK 3.2.4. Air passenger duty.........................................................................................................30 UK 3.2.5. Lottery Duty...................................................................................................................32 UK 3.2.6. Insurance premium tax (IPT) ........................................................................................33 UK 3.3.1. Business rates — Scotland.............................................................................................34 UK 3.3.2. Rates — Northern Ireland.............................................................................................35 UK 3.3.3. Business rates — England .............................................................................................36 UK 3.3.4. Business rates — Wales .................................................................................................37 UK 3.3.5. Stamp duty reserve tax ..................................................................................................38 UK 3.3.6. Amusement machine licence duty..................................................................................39 UK 3.3.7. Stamp duty .....................................................................................................................40 UK 3.3.8. Council tax —Great Britain ..........................................................................................41 UK 3.3.9. Landfill tax.....................................................................................................................43 UK ????. Climate Change Levy (CCL).........................................................................................44 2 UK 1.1. Income tax Legal base Income and Corporation Taxes Act 1988, as amended by subsequent finance acts. Beneficiary The central government. Tax payable by Persons resident or ordinarily resident in the United Kingdom and persons to whom income arises in the United Kingdom. Basis of assessment Total income from all sources less allowable deductions. Certain losses and necessary work expenses may be offset against income, and allowances are granted for expenditure on certain capital equipment. From 6 April 1996, under a system of self assessment, the taxpayer files a return of total income and capital gains and pays tax by reference to a fixed set of dates. The trading income of the self employed is taxed along with their personal income under the UK's normal personal tax regime. Expenses incurred wholly and exclusively for the purposes of earning the trading income are deductible in arriving at taxable trading profits. Those profits are then added to their other taxable income, and they are allowed to deduct the normal personal allowances. Exemptions Among others, certain social security benefits, armed forces wound and disability pensions, war widows' pensions, income from educational scholarships in the hands of the recipient. Interest and dividends from investment in individual savings accounts, personal equity plans and tax-exempt special savings accounts, interest on National Savings Certificates, the first GBP 70 interest on ordinary accounts with the National Savings Bank and gambling winnings. Charitable bodies are also generally exempt. Deductions Personal tax allowance for all individuals. Also allowance for families with children on low to middle incomes. Additional allowances, mainly for married couples over 65 where one member was born before 6th April 1935 and registered blind people. Relief for subscriptions for shares under the Enterprise Investment Scheme. Also for premiums on insurance to provide a retirement annuity, contributions to approved pension schemes and private medical insurance schemes and vocational training. Some of these allowances and reliefs are restricted to giving relief at a specific rate. Non-residents Non-residents are subject to tax on income arising in the United Kingdom, with certain exceptions. There are special provisions regarding deductions for personal allowances for non-resident individuals. Collection Tax is assessed annually. In the case of income from employment and occupational pensions, tax is deducted at source by the employer (see "Income tax — employment income"). Tax is deducted at source from some income from abroad paid through an agent in the United Kingdom, and from certain annual payments including bank and building society interest. The tax year is from 6 April to the following 5 April, and total income is computed on a current year basis, but business profits of an accounting year are treated as being those of the tax year. Responsibility for providing full details to establish the tax liability for the year rests with the taxpayer. This includes all sources of income, less allowable deductions, and capital gains. So that there will be a single tax bill for the year. Taxpayers who are within the recently introduced system of self assessment can either carry out the calculation of liability and 3 submit the return by 31 January following the year of assessment; or submit the return by 30 September and ask the Inland Revenue to do the calculation. Rate - Starting rate: 10 % (on first GBP 1,880 of taxable income). - Basic rate: 22 % (on taxable income between GBP 1,881 and GBP 29,400). - Higher rate: 40 % (on taxable income over GBP 29,400). The rates of tax on savings income are 20 % for income above the starting rate limit (GBP 1,880) and up to the basic rate limit (GBP 29,400) and 40 % above that limit. The rates of tax applicable on dividends are 10 % for income up to the basic rate limit (GBP 29,400) and 32.5 % above it. Special features Up to 1996/97 inclusive, for most long-established partnerships, tax on partnership profits is assessed on the partnership, but the liability takes account of the shares and personal circumstances of the individual partners. From 1997/98 for all partnerships the partnership will make a return to allocate the partnership income between the partners, and the individual partners will include those figures in their personal returns. A partnership for this purpose includes a general partnership, a limited partnership and a limited liability partnership. 4 UK 1.2. Income tax — employment income Legal base Income and Corporation Taxes Act 1988, Part V. Beneficiary The central government. Tax payable by Individuals, who are resident and ordinarily resident in the United Kingdom, are liable to tax on the whole of their earnings wherever they arise. This includes earnings for employment carried out in the United Kingdom as well as abroad. A special deduction is available to seafarers in certain circumstances when employment is carried out wholly or partly abroad. (Individuals who are resident but not ordinarily resident in the United Kingdom are liable to tax on earnings for employment carried out outside the United Kingdom only to the extent that these earnings are remitted to the UK.) Individuals who are not resident