How Different Is UK Taxation System From The Indian

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      How Different Is UK Taxation System From The Indian

      Taxation is a crucial part of every modern economy, allowing governments to provide their citizens with essential public services and infrastructure. There are many different types of taxes, including income tax, property tax, corporate tax, sales tax, value-added tax (VAT), excise tax, and customs duty, among others. The tax system can be complex, with various exemptions, deductions, and credits available to individuals and businesses.

      The taxation systems in the UK and India are similar yet significantly different in many ways. This article has both Indian as well UK taxation explained. 

      If you want to master taxation and establish yourself as a finance professional, you can consider taking up an ACCA course which is one of the most popular UK taxation courses in India. 

      Also, if you’d like to know more about the scope of an ACCA, read our blog “ACCA Career Scope and Job Opportunities in India and Abroad”.

      The Difference In Income Taxes 

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      The income tax systems in the UK and India differ in several ways. Here are some of the key differences:

      Income Tax

      Income tax rates in the UK are generally higher than those in India. The UK’s introductory income tax rate is 20% (for income up to £50,270), while the highest rate is 45% (for income of over £150,000). 

      In India, the introductory tax rate for individuals is 5% (for income exceeding INR 2.5 lakhs), and the highest tax rate is 30% (for income over INR 10 crores).

      Deductions And Exemptions

      There are also differences in the deductions and exemptions available under the income tax systems in the UK and India. In the UK, taxpayers can claim various tax reliefs and allowances, such as personal allowances, which reduce the amount of taxable income. 

      In India, there are several deductions and exemptions available, such as deductions for certain investments, medical expenses, and education expenses.

      Tax Filing 

      In the UK, taxpayers have to file a tax return if they have income that is not taxed at source or if they are self-employed. In India, taxpayers are generally required to file a tax return if their income exceeds a certain threshold, regardless of the source of income.

      The Difference In Property Taxes

      The property tax systems in the UK and India are different in several ways. Here are some of the key differences:

      • In the UK, property tax depends on the value of the property. This tax is known as Council Tax. The local council determines the amount of tax payable by assessing the property’s value. 

      In India, property tax is usually based on the property’s rental value.

      • The property tax rates in the UK and India vary depending on the location and value of the property. In the UK, Council Tax rates are set by local councils, with the average rate for a Band D property in England for the financial year 2021/22 being around £1,895. 

      In India, property tax rates are set by the local municipality and can range from 0.2% to 2% of the property’s annual rental value.

      The Difference In Corporate Taxes

      The corporate tax rates in the UK and India are also different. Here are some of the key differences:

      • In the UK, the standard corporate tax rate is 19%, which applies to all companies with taxable profits. 

      In India, the standard corporate tax rate is 25% for companies with a turnover of up to INR 400 crores and 30% for companies with a turnover over INR 400 crores.

      • In the UK, dividends paid by UK companies are subject to a dividend tax set at 7.5% for basic rate taxpayers and 32.5% for higher rate taxpayers. The dividend tax rate is 38.1% for additional rate taxpayers.

      In India, dividends are subject to dividend distribution tax (DDT), which is currently set at 15% plus surcharge and cess.

      • In the UK, companies are subject to capital gains tax (CGT) on selling assets such as property or shares. The standard corporate CGT rate is 19%, which applies to all companies with taxable gains. 

      In India, companies are also subject to capital gains tax on the sale of assets. This rate varies depending on the asset type, and the time it was held.

      Similarities Between The UK And Indian Taxation Norms

      There are some similarities between the UK taxation laws and Indian taxation laws. Here is a look into the similarities between the taxes of the two countries: 

      Indirect Taxation 

      The indirect taxation system in both countries adds a tax component to the final price of goods and services. Businesses are responsible for collecting and remitting the tax to the government.

      Tax Treaties 

      Both the UK and India have signed various tax treaties with other nations to avoid double taxation and promote international trade and investment. These treaties usually cover income taxes, capital gains, and dividends earned by individuals and businesses. These treaties facilitate global commerce and economic growth by reducing the tax burden on cross-border transactions.

      Wrapping Up

      With the increasing complexity of tax laws, there is a growing demand for tax professionals with specialised knowledge in specific areas of taxation both in India and the UK. An ACCA course is one of the most in-demand UK taxation courses online that one can take up to pursue a global career in taxation.

      This certification offers excellent UK taxation jobs in India and abroad. If you need help establishing yourself as an ACCA, read our blog “How to Make a Career in ACCA? What are Some of the Best Jobs?

      Zell Education is the ultimate destination for anyone who wants to be a certified ACCA. Zell Education hires professionals with experience in the industry to teach their courses, offers customised learning schedules, and guarantees assistance with job placement. Visit Zell Education for additional information about the ACCA programme.

      FAQ

      What is UK corporation tax?
      UK corporation tax is a tax on the profits of UK resident companies and non-UK resident companies with a UK permanent establishment. The current rate of corporation tax in the UK is 19%.

      Do Indians have to pay taxes in the UK?
      If an individual from India has to pay tax in the UK depends on several factors, such as their residency status, their source of income, and the terms of any tax treaty between the UK and India.

      Do UK and India have double taxation?
      The UK and India have a double taxation avoidance agreement (DTAA), which prevents individuals and companies from paying double taxes on their earned income.

      What are the jobs for CA?
      A CA’s role in taxation involves tax planning, compliance, and advisory services for clients. They also represent clients in tax audits, assessments, and litigation matters and provide due diligence services for clients involved in mergers and acquisitions. To know more about the best CA institutes, CA jobs in India, and CA salaries, read our blog “A Complete Guide To Chartered Accountancy (CA) Course”.

       

      Partham Barot is an ACCA-certified professional. showcasing his expertise in finance and accountancy. he’s revolutionising education by focusing on practical, real-world skills. Partham’s achievements underscore his commitment to elevating educational standards and empowering the next generation of professionals.

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