Interesting UK Taxation Terms You Should Know about | Zell

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      UK Taxation Terms That Every Accounting Student Should Know

      Last Update On 30th December 2024
      Duration: 4 Mins Read

      The United Kingdom’s taxation system is one of the most complex and comprehensive in the world. It is a critical component of the UK economy, providing revenue to the government for funding public services, infrastructure development, and other essential programs. The UK taxation system is based on progressive taxation, meaning that individuals with higher incomes must pay a higher percentage of their income in taxes than those with lower incomes.  Enrolling in UK taxation courses online, like an ACCA course, is worthwhile if you aspire to develop the knowledge and skills related to the UK taxation system. 

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      Understanding the Different UK Taxations

      Governments generate tax revenue using a combination of different types of taxes, which include individual and corporate taxes, social insurance taxes, taxes on goods and services, and property taxes.

      Despite the several kinds of taxes that exist in the United Kingdom, the four main ones which produce the highest revenue are as follows:

      Corporate Taxation in the UK:

      Corporate taxation in the United Kingdom is the tax imposed on the earnings of companies and other corporate bodies.

      It is one of the main sources of revenue for the UK government and funds a wide range of public services and social programs. Corporate tax will be levied on the profits of companies whether derived from the UK or a permanent establishment in the country.

      The computation of corporate tax is determined through taxable profits of the company which is computed by reducing the company’s total income from all its sources by allowable expenses.

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      Individual Taxation in the UK:

      Individual taxation in the UK is a system of taxing individuals who are residents of the country on their income, as well as their available assets. The system collects revenues for the government by taxing the income and available assets held by the individual, which all funds the public services provided to the citizenry through the social programmes.

      The primary taxes that individuals must pay in the UK include national insurance contributions, income tax, and capital gains tax. 

      Individuals pay national insurance contributions to fund the UK’s social security system, which supports programs such as state pensions and unemployment benefits. 

      Capital gains tax in the UK must be paid on the sale of assets such as property and investments.

      Wondering what the future of UK taxation jobs in India is? Read our blog “ACCA Career Scope and Job Opportunities in India and Abroad” if you would like to know more about the scope of an ACCA.

      Property Taxation in the UK:

      Property taxes in the United Kingdom are levied on property owners. The rate of property taxes is based on the value of the property.

      These taxes are an important source of revenue for local councils and are used to fund a wide range of public services such as schools, road maintenance and waste collection.

      The two major property taxes in the UK are council tax and business rates.

      The council tax is a local tax paid by households, and it is based on the value of their property and is applied at different rates in accordance with the bands of their property values. Business rates, therefore, are a tax imposed on commercial property owners; these are based on the value of their property and its nature.

      International Taxation in the UK:

      International taxes within the UK are collected for the incomes or assets the person has outside the country.

      The international tax system is complex, and the structure is in such a way that the tax is collected within the country where the incomes are made.

      These taxes are levied on income and assets acquired or owned outside of the UK and the rate will depend on the nature of the income or assets.

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      Conclusion

      These are some basic terms used in UK taxation that any accounting student should familiarise themselves with. Knowledge of these laws and terms of UK taxation are essential for proper accounting and tax planning.

      If you want to have an international tax career, then an ACCA course is a fantastic idea for you. It is among the most sought-after UK taxation courses in India. So, it will offer you the skills and knowledge necessary to excel in that particular field.

      The comprehensive online ACCA course offered by Zell Education is designed to equip students with the necessary expertise in tax laws, regulations, and compliance requirements, enabling them to navigate the complexities of the tax landscape and provide valuable tax-related advice and solutions. 

      FAQs On UK Taxation

      Are UK taxes higher than the US?

      The United Kingdom’s tax system is a little higher compared to the United States.

      How do UK taxes work?

      In the UK taxation system, there is a progressive tax application, which requires the payers with more significant income to pay more significant amounts from their earnings compared to payers with lower incomes.

      Are UK taxes high?

      UK earners are taxed at relatively lower rates compared to other European and OECD countries.

      Are UK taxes going up?

      The UK government has declared the corporate tax rate will go up to 25% in April 2024 as planned.

       

      Satyamedh Nandedkar, a seasoned finance professional, holds ACCA, CA, US CMA & CS credentials. With 10+ years of experience, he’s a master ACCA tutor, IFRS trainer, adept in global financial standards, and a trusted advisor in navigating complex financial landscapes.
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