VAT in the UK Other Taxes to Be Paid Besides Value Added Tax

In addition to Value Added Tax VAT, the UK levies various other types of taxes that cover multiple aspects such as personal income, business operations, and property transactions. Understanding these tax categories is crucial for individuals and businesses living or working in the UK, as they directly impact financial planning and economic conditions.

Firstly, for individuals, Income Tax is an essential component of the UK's taxation system. It applies to all income earned within the UK, including wages, pensions, investment returns, etc. The rates vary according to income levels, categorized into basic rate, higher rate, and additional rate. For instance, based on data from HM Revenue and Customs HMRC, in the 2025-2025 fiscal year, the basic rate applies to income between £12,571 and £50,270, at a rate of 20%. This means if someone’s annual income is £40,000, this portion will be taxed at 20%.

Next, National Insurance Contributions NICs are another mandatory fee that UK residents must pay. These contributions primarily support the National Health Service NHS and other social welfare programs. Unlike Income Tax, NICs are mainly levied on employees, self-employed individuals, and employers. For regular employees, NICs start being calculated once weekly earnings exceed a certain threshold, currently set at £170 per week. Employers also need to pay corresponding NICs for their employees.

Furthermore, Capital Gains Tax CGT applies to profits made when individuals or entities sell assets, which can include real estate, stocks, bonds, and other forms of investments. Generally, individuals have an annual exemption amount, which was £6,000 in the 2025-2025 fiscal year. Any gains exceeding this limit are subject to CGT at applicable rates. For example, if someone makes a net gain of £50,000 from selling a property and their total capital gains do not exceed the exemption threshold, no tax needs to be paid; however, if it exceeds the exemption, the excess amount should be taxed at the current rates.

In the commercial sector, companies also face Corporation Tax. This tax specifically targets the profits earned by profit-making organizations. Starting from 2025, most small and medium-sized enterprises in the UK will have a Corporation Tax rate of 19%, while larger companies will face a standard rate of 25%. It is worth noting that certain specific industries may enjoy special tax incentives, such as being able to offset a proportion of research and development expenditures against taxable profits.

Lastly, Stamp Duty Land Tax SDLT cannot be overlooked. When purchasing residential or commercial properties, buyers must pay this tax. The exact amount of SDLT depends on the transaction price and the type of property. For example, under the 2025 rules, there is no SDLT for the purchase of a first home valued below £250,000; whereas for non-first-time buyers, even if the total price is below this figure, it might still trigger the lowest tax rate.

In summary, the UK's tax system is complex and diverse, covering a wide range of areas. Whether as ordinary citizens or entrepreneurs, during operation or residence in the UK, one should closely monitor policy changes and properly arrange finances to minimize unnecessary expenses. It is also recommended to consult professional accountants or tax advisors for more accurate information and support services.