UK Fact-File Part 2:
Individual Business Domestic Taxation
2.12 UK Individual Business Other Taxes
In addition to the main UK taxes – Corporation
Tax, Income Tax, VAT and Capital Gains Tax – there are a number
of other taxes, paid nationally or locally.
Council tax is levied by local authority bodies (town or
county councils) and is payable by every residential household.
Businesses do not pay council tax but will have to pay business
rates (property taxes); these are payable to the local authority
in the area in which the business is located.
Inheritance Tax is due if someone’s estate is valued at over
GBP325,000 (from April 2009). The amount of tax due will be
at 40% of the amount that exceeds this threshold. Where the
value of an estate is less than the threshold, then there
will be no liability for Inheritance Tax. Any assets held
in trust or gifts made within seven years of the death of
a person will be liable to the tax, provided that the combined
value of the estate exceeds the threshold. Married couples
(and civil partners) are permitted to transfer the first spouse’s
unused Inheritance Tax threshold to the second spouse, thereby
doubling the threshold for the surviving spouse. There are
some exemptions from Inheritance Tax – these include donations
to registered charities and any part of an estate left to
a spouse.
Vehicle Duty: This can be a significant
cost to road haulage and public service business, especially
where there are several vehicles in a fleet. Examples of the
annual cost of some vehicle licences are available here,
but the exact rate of vehicle duty will depend on the weight
and classification of the vehicle.
From April 2010, the purchase of a new car attracts a different
'first year rate', based on the fuel type used, and the carbon
emissions levels. This is designed to encourage increased
use of 'green' vehicles.
With regard to stamp duty, there are three forms in the UK
- Stamp Duty Land Tax;
- Stamp Duty Reserve Tax;
- Stamp Duty
The last-named is imposed at a rate of 0.5% on the non-electronic
sale or transfer of shares (worth more than GBP1,000). It
is additionally imposed on certain transfers of interests
in partnerships, and before December 2003, was levied on land
or property transactions.
Stamp Duty Land Tax (SDLT) is payable on the purchase or
transfer of property or land in the UK, subject to threshold
limits. Most transactions concerning the sale or transfer
of property or land must be notified to the HMRC on the appropriate
form. Certain factors will determine how much, if any tax
is due.
In general terms, SDLT is levied as a percentage of the amount
paid by the purchaser or the value when it was transferred.
The tax rate starts at 1%, rising to either 3% or 4%, depending
on both the value, and whether the property is residential
or non-residential. SDLT usually becomes due for properties
or land where the value exceeds GBP 125,000 (although this
threshold was increased for a year until the end of 2009 to
GBP175,000), and - although it reverted on January 1 2010
- a new, two year higher threshold of GBP250,000 was put in
place in the 2010-11 Budget, which is set to end on March
24, 2012. Traditionally, the threshold has been GBP150,000
for non-residential properties.
Where the property exceeds the threshold, the tax is paid
on the entire value.
For leasehold properties transfers may be liable depending
on the length of the lease, and varying between residential
and non-residential leases. Tax liability also depends on
whether the lease is a new lease or an existing one.
For non-residential leases, SDLT may be payable on the premium
and the net present value of the rent. If the annual rent
is more than GBP1,000, the buyer will be liable to pay SDLT
on the full amount of the premium paid, even if it is within
the GBP150,000 non-residential threshold. The rate of 1% applies
up to the next threshold of GBP250,000.
Stamp Duty Reserve Tax (SDRT) is payable on electronic (paperless)
transactions for the purchase of shares in a UK company, dealings
in a foreign company with a share register in the UK, options
to buy shares, rights arising from shares already owned and
where there is an interest in shares (eg the profit made from
sale of shares). The majority of paperless share transactions
are processed electronically through the electronic settlement
and registration system (CREST). The SDRT is deducted at source
and remitted to HMRC. SDRT is payable at a flat rate of 0.5%
on the amount paid for the shares (not the value).
Businesses located in the UK are also likely to be subject
(indirectly) to excise taxes on alcohol, tobacco, and fuel,
and to customs duties on certain items brought into the UK
from abroad.
There is no Alternative Minimum Tax for individuals in business.
There are no special income tax regimes for individuals
in business.
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