Navigating UK Tax Settlement: A Comprehensive Guide
The tax systems of European countries are convergent in many aspects, but identifying significant differences is also not a problem. When it comes to tax settlements in the UK, the main difference is that in the UK the tax year does not coincide with the calendar year. It lasts from April 6 to April 5 of the following year, so in relation to Poland, tax returns are submitted several months later. The tax settlement process itself is also slightly different.
Taxes applicable in the UK
Great Britain is known around the world as an entrepreneur-friendly country. Indeed, setting up a company in England is very simple, handling accounting matters does not pose many difficulties, and entrepreneurs willingly use the comprehensive services of accounting offices, which makes running a business much easier. The Polish accounting office deals with all formalities related to setting up a company, settling taxes, and employee matters, so that the entrepreneur can focus on developing the business and increasing profits.
The fact that the British jurisdiction is business-friendly is best demonstrated by the nature and amount of applicable taxes. Taxes in Great Britain are divided into direct and indirect. It is the same in Poland, but the differences include, among others: tax rates.
But let’s start from the beginning. Direct taxes in the UK include Income Tax, i.e. personal income tax, Corporation Tax, i.e. corporate income tax, Capital Gain Tax, i.e. capital gains tax, Inheritance Tax, i.e. inheritance tax and Stamp Duty, i.e. purchase fees real estate and stock exchange. Indirect taxes include VAT, excise duty and customs duty. For obvious reasons, income tax arouses the most emotions.
UK tax settlements – income tax
Self-employed persons, shareholders of LTD companies, as well as entrepreneurs conducting business in other forms are subject to income tax. Of course, those who work under an employment contract or obtain income from other sources are also obliged to settle and pay tax. Settlement of UK tax is therefore a topic close to British citizens, as well as foreigners who work in the UK, receive benefits or run their own businesses. The currently applicable tax rates for personal income tax are 20%, 40% and 45%, while for corporate income tax it is 19%.
As you can see, these are not the lowest rates, so where does the belief that the British tax system is friendly to entrepreneurs come from?
Every Polish accountant in the UK will answer that this belief results from the fact that Great Britain allows the use of many tax optimization methods, as a result of which taxes in the UK are lower than in Poland.
How to properly settle income tax in the UK?
The situation is different in the case of self-employed people, who are obliged to submit a tax return every year. Everyone who runs a Sole Treder business is fully responsible for paying their taxes, and therefore must ensure that they complete their tax return. Of course, you can ask an accounting office to prepare the return. Running your own business is, in many respects, a big challenge, which is why establishing cooperation with accounting specialists is profitable for entrepreneurs.
