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Taxation in the UK

Updated on Monday 14th May 2018

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1. What is the corporate tax in UK?

The standard corporate tax rate for companies registered in the United Kingdom is 24%. Oil rights and extractions are not subject to corporate tax. There is also a different rate for small companies with less than 300,000 GBP per year. These have to pay a 20% corporate tax.
2. What is the VAT in UK?

The standard VAT rate in UK is 20%, with a reduced rate of 5% for things like children’s car seats or domestic heating fuel. There are also zero-rated goods and services, as well as exempts. The registration for VAT is mandatory for entities with taxable supplies above 73000 GBP. If the taxable supplies decrease below 73000 GBP, the deregistration is possible.
3. How can the VAT be refunded in UK?

As an EU member you can claim for refunds of VAT in UK by completing an online form and submitting it to your own tax authority by latest the 30 of September of the calendar year following the refunding period. The period covered by the claim cannot be less than a year but smaller than three years.
The non EU members must submit an application regarding the refund, accompanied by the original invoices, a proof of payment of the VAT, a certificate of registration of the company in the foreign country. The above documents must be submitted to the HM Revenue and Customs. 
The decision regarding the refund is taken no later than four months and if its granted, the amount is transferred in the account of the claimant no later than 10 days.
4. What is the dividend tax in UK?

Dividends are usually exempt from taxes in UK, unless they are paid to a bank or an insurance company, when a 20% is paid.

5. What are the taxes rates applied on other payments?

The interest and royalties paid to a nonresidents are usually taxed with 20%, unless are minimized or abolished by a treaty signed by UK with the foreign country where the dividend is paid.

6. Are there any incentives for foreign investors in UK?

Britain is a very attractive point of investments for foreign residents, but there are no tax incentives particularly designed for investors that come from abroad. However, they can be a subject to tax deductions in the UK system if they meet the specified requirements.  For instance, the United Kingdom is willing to encourage the investment in small companies, therefore some incentives are offered to the investors, no matter the residency.

7. Why do I need a local accountant for my business in UK?

It is strongly recommended that you have a British accountant, since proper accounting practices will bring only good to the company. Moreover, there is also a Code of Practice on Local Authority Accounting in the UK that has to be met in order to have no worries.

Please contact us for company formation in the UK.


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