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Taxation in United Kingdom

United Kingdom

Taxation in United Kingdom

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Taxation in the UK

Corporate tax rates

The standard or main rate of corporation tax in the UK is 23 per cent and applies to both resident and non-resident companies. Marginal relief is applied to profits between the various rates, easing the transition between the small companies rate and the main rate. HM Revenue and Customs

Capital Allowances

The UK has an extensive range of capital allowances that allow the costs of capital assets to be written off against taxable profits.

Tax credits for research and development

Research and development (R&D) tax credits are available for large corporations and SMEs investing in R & D:

In addition to the normal 100 per cent deduction, large companies are entitled to a further deduction from their taxable income of 30 per cent of their current spending on qualifying R&D. For example, if a company spends £100,000 on qualifying R&D, it will be able to deduct £100,000 from its taxable income under ordinary tax rules and an additional £30,000 under the R&D tax credit.

In addition to the normal 100 per cent deduction, SMEs are entitled to a further deduction from their taxable income of 75 per cent of their current spending on qualifying R&D (for the purposes of this scheme only, an SME is defined as a company employing up to 500 people).

The rate for an employers National Insurance Contributions (NIC) on the earnings of each individual employee (earning over £157 per week) is 13.8 per cent, with no upper limit. Employees pay NIC on the part of their earnings which falls between £109 and £797 per week at a rate of 12 per cent, while employees paid more than £797 per week will pay NIC at 2 per cent on all earnings above that figure, with no upper limit.

Approved and tax-favoured share plans

The UK Government actively supports small companies, entrepreneurs and an innovative business environment by encouraging the granting of stock/share options. There are several specific schemes employers can utilise to reward employees, such as:

  • the Enterprise Management Incentive,
  • the Share Incentive Plan,
  • Save as You Earn, and
  • Approved Company Share Option Plans.

Click here to Ask an Expert about Taxation in United Kingdom

Organisations that can assist with Taxation

  • > Paul Beare Ltd

    Paul Beare Ltd are UK based accountants and legal advisors to overseas companies setting up in the UK. They work with companies either entering, or already operating in the UK.

    More Details Visit Website
  • > GCE Global Solutions

    We are "GCE GLOBAL SOLUTIONS" the global evolution of " GRUPO CONSULTOR EMPRESARIAL " with the acronym "GCE ", a leader in the area OUTSOURCING IN BUSINESS MANAGEMENT for business administration worldwide, we have established our own international network of partners in each country.

    More Details Visit Website
  • > The Motley Fool

    The Motley Fool is dedicated to helping the world invest better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, mutual funds, and premium investing services.

    More Details Visit Website
  • > Sovereign Group

    Sovereign offers a range of advisory and support services to assist companies of all sizes to establish successful business operations in foreign markets.

    More Details Visit Website

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