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Overview
There is a range of taxes in the UK that fund public spending. In 2023-24, the UK government raised around £1.1 trillion in taxes, most of which was sourced from income tax, national insurance, and value-added tax (VAT).
The government’s fiscal year runs from 1 April to 31 March – although most companies align their tax year with this, they may choose different dates. Meanwhile, the tax year for individuals is between 6 April and 5 April.
The following authorities oversee different taxes:
- HM Revenue and Customs (HMRC)
- Local governments
In the UK, individuals, companies, and trusts pay taxes. Residents are taxed on their worldwide earnings, while non-residents only pay taxes on what they earn in the UK.
Income Tax and National Insurance
Most workers pay their income tax through Pay As You Earn (PAYE), where the tax is taken from their salary before they receive it. However, those with more complex tax considerations must file a Self Assessment return.
Most workers also make National Insurance contributions, which fund benefits and pensions. If you are an employee, these payments are taken out of your salary at the same time as your income tax. Most self-employed individuals will pay Class 2 and Class 4 contributions
If you live in the UK and are over 18, you’ll almost certainly need to pay council tax, a fee that goes to the local government. It pays for local services, including rubbish collection, emergency services, road maintenance, and libraries.
Council Tax
How much you pay depends on the value of the property you live in and where it is located. Each council sets out different brackets according to property values, and there may be different rates depending on the parish or town. The amount of council tax that each household owes is usually between £1,000 and £4,000 per year.
Other common taxes
Other taxes payable include
Capital Gains Tax (CGT)
Inheritance Tax (IHT)
Stamp Duty Land Tax (SDLT)
Car, Road and Airport Tax
Value Added Tax (VAT)
Corporation Tax
Business rates