I thought I’d do a bit of a high-level Tax review for a UK PAYE employee like myself. I live in Scotland so this is scoped this end of town.
Here is an example of a table of income tax, National Insurance, and VAT for a PAYE employee in Scotland:
| Taxable Income | Tax Rate | National Insurance | VAT (Spending) | Total Tax |
|---|---|---|---|---|
| Up to £12,500 | 0% | 12% | 20% | 32% |
| £12,501 – £14,585 | 19% | 12% | 20% | 51% |
| £14,586 – £25,158 | 20% | 12% | 20% | 52% |
| £25,159 – £43,430 | 21% | 12% | 20% | 53% |
| £43,431 – £150,000 | 41% | 12% | 20% | 73% |
| £150,001 and over | 46% | 12% | 20% | 78% |
In this example, the table shows the different tax rates and the corresponding tax due for different ranges of taxable income, including National Insurance and VAT on spending. Keep in mind that this is just an example, and the actual tax rates and amounts may vary depending on your specific circumstances.
England Tax Compared to Scotland
This example is of income tax, National Insurance, and VAT for a PAYE employee in England:
| Taxable Income | Tax Rate | National Insurance | VAT on Spending | Total Tax |
|---|---|---|---|---|
| Up to £12,570 | 0% | 12% | 20% | 32% |
| £12,571 – £50,270 | 20% | 12% | 20% | 52% |
| £50,271 – £150,000 | 40% | 12% | 20% | 72% |
| £150,001 and over | 45% | 12% | 20% | 77% |
UK VAT Rules
In the United Kingdom, VAT (Value Added Tax) is a tax that is applied to most goods and services that are purchased and sold within the country. The standard VAT rate in the UK is 20%, although some goods and services are subject to reduced or zero-rated VAT.
Goods and services that are subject to the standard VAT rate include:
- Most goods and services sold by businesses, including goods imported from other countries
- Most goods and services purchased by consumers, including those purchased online or by mail order
Goods and services that are subject to reduced or zero-rated VAT include:
- Some essential goods and services, such as food and children’s clothing
- Some exported goods and services, including those sold to customers in other EU countries or to customers outside the EU
- Some services provided by charities, including fundraising events and educational services
It is important to note that the VAT rules and rates can change over time, so it is best to consult with a tax professional or refer to the relevant tax laws and regulations to determine the correct VAT rate for specific goods or services.
Income & Inheritance Taxes
In addition to income tax, National Insurance, and VAT, there are several other taxes that are applicable in the United Kingdom. Some of these taxes include:
- Corporation tax: This tax is applied to the profits of businesses and corporations operating in the UK. The corporation tax rate is 19% for most businesses, although some businesses may be eligible for a lower rate.
- Capital gains tax: This tax is applied to the profit or gain that is realized when an individual or business sells an asset, such as a property or investment, for more than the purchase price. The capital gains tax rate varies depending on the individual’s income tax bracket and the type of asset being sold.
- Inheritance tax: This tax is applied to the value of an individual’s estate when they pass away. The inheritance tax rate is 40% for estates valued at more than £325,000, although some exemptions and reliefs may apply.
- Stamp duty: This tax is applied to certain types of property transactions, such as the purchase of a property or the transfer of land or property. The stamp duty rate varies depending on the value of the property and the type of transaction.
Keep in mind, some of the above info is about to undergo changes.
UK Council Tax
Council tax is a tax that is applied to households in the United Kingdom. The tax is used to fund local government services, such as waste collection, road maintenance, and police and fire services. The council tax rate varies depending on the value of the property and the location of the property.
Each property is assigned to a council tax band, ranging from A to H, with A being the lowest band and H being the highest. The council tax rate for each band is set by the local council, and the rate is typically based on the value of the property relative to other properties in the area. The council tax is typically paid by the property owner, although tenants may be required to pay a portion of the tax if they are renting from a landlord.