Talk:Taxation in the United Kingdom

From Wikipedia, the free encyclopedia

	This article is within the scope of WikiProject Taxation, an effort to create, expand, organize, and improve Tax related articles to a feature-quality standard.
Assessment ratings and other indicators given below are used by the Project in prioritizing and managing its workload.
B	This article has been rated as B-Class on the Project's quality scale.
Top	This article has been rated as Top-priority on the Project's priority scale.
	After rating the article, please provide a short summary on the article's comments page to explain your ratings and/or identify the strengths and weaknesses.

Contents 1 overview suggestions .. 2 Residency and domicile 3 Tax Exiles 4 Top rate income tax 5 Company domicile 6 Residence and domicile: Not quite right 7 Income Tax on Knowhow supplied by individuals and converted into equity 8 Article organisation 9 Value Added Tax in the UK

[edit] overview suggestions ..

This topic is a CATEGORY , and not suited for being a subject page One can reinforce the overview nature of this wiki page by having independent pages for > income tax > local taxes > customs > excise > VAT I can help develop the "baby" pages Sanjiv swarup 07:32, 22 March 2007 (UTC)

The topic is suitable for both a article and a Category. The article should cover the topic areas until they are large enough to form their own article. At that point, it goes into a Summary Style format. Several of these sub-articles already exist in some way. Specific articles to the UK could be created but I think they should have sufficient content (by expanding here first). Morphh ^(talk) 13:52, 24 March 2007 (UTC)

Sanjiv swarup 08:00, 26 March 2007 (UTC) Ok, I hav started putting the content together. Please see article = http://en.wikipedia.org/wiki/UK_income_tax j

Morphh suggested expanding here 1st, which would be better until a spilt is required. I do not think a split is required yet, especially as the page you have created does not appear to add any content and contains much that is not relevant to UK income taxes. I intend to undo this split when I have time. GameKeeper 09:22, 26 March 2007 (UTC)

I have now undone the split. GameKeeper 09:03, 27 March 2007 (UTC)

[edit] Residency and domicile

Are we not confusing residency and ordinary residency? Also, can't we say more on domicile? Isn't it domicile by birth or by being here 17 years out of 20, but v difficult to lose? (I specialise in corporate tax, though, and so am not as familiar with personal taxation issues as I could be.) In fact, I'm sure the remittance basis position of non-UK domiciled individuals is not adequately explained either. jguk 17:54, 2 Jan 2005 (UTC)

The rules are, of course, a lot more complicated than the summary I gave. However, what I wrote is broadly correct and does not create an incorrect impression. I think that some of the detail now added is unhelpful as it gives a few more facts but not more information. And the section now jibes with the initial sentence of the article. We can add all the provisions of the complicated tax code together with established practice and case law on these particular issues but I suggest we do not. E.g. the distinction between "resident" and "ordinarily resident" I suggest we disregard for the purpose of this article. The issue of residence and domicile is also mentioned in passing in the tax haven article. But neither that article nor this needs a detailed treatment of these issues: If that is needed at Wikipedia (and why not?) then it needs its own article. Also, the "dubious" tag has been inserted but you do not say why. I would like to revert some of your changes and keep others. What say you? Paul Beardsell 05:20, 3 Jan 2005 (UTC)

I've re-added the dubious tag as the definition of residency is wrong [1]. I agree this is a summary, but to my mind that does not mean we should give inaccurate definitions. Maybe we just refer to residency and ordinary residency and provide a link to a more detailed discussion. What would be really good is a separate United Kingdom income tax article. (Note United Kingdom corporation tax is currently on FAC, if you'd like to comment on it.) jguk 09:52, 3 Jan 2005 (UTC)

I was making the same mistake I was arguing against above: We cannot hope here to duplicate the tax regs faithfully because they are huge and changing so I should not have attempted to give a definition of residency. Please feel free to replace the dubious tag if you are still unhappy. What is FAC? Paul Beardsell 12:51, 3 Jan 2005 (UTC)

Not that we should necessarily believe what the Revenue tell us in IR20 (in this case, Revenue practice bears only a passing resemblance to the underlying caselaw, but as their position generally favours the taxpayer more than the cases would suggest, nobody worries too much).

Wikipedia:Featured article candidates. Pity I won't be around for the next week or so to contribute to it. -- ALoan (Talk) 23:40, 3 Jan 2005 (UTC)

[edit] Tax Exiles

I came to this page looking for an explanation of the term "tax exile", which I (an American) have heard numerous times in reference to wealthy British citizens. The implication as I understood it is that England taxes its wealthy citizens so highly that many move out of the country in order to save their money, and that this is a common (and perhaps uniquely, or at least characteristically British) phenomenon. There is no article for Tax exile, and the link in the Exile article links only to Tax haven, which makes no mentioned of tax exiles. Could someone who's in the know on this phenomenon write a piece on it for the 'pedia? (Or let me know if I'm just completely off base or misunderstanding the issue.) Thanks! — Adam Conover † 20:13, July 24, 2005 (UTC)

A tax exile is always(?) one who takes advantage of a tax haven. As you will read at tax haven the UK can be a tax haven for foreigners residing in Britain. And you will read that the USA (uniquely) makes it difficult/impossible for its citizens to legally avoid US tax even if resident abroad. Paul Beardsell 12:34, 14 August 2005 (UTC)

Furthermore, the top UK rates of tax are not particularly high (by international standards), and much easier to mitigate through investment strategies than US income tax, especially as non-residents are not subject and three territories exist within the United Kingdom & Islands which can provide tax relief, as well as simply having a good accountant (not to mention massive exemptions on the ownership of land, capital gains, and other unearned sources of income). It should be noted that of the UK's 40-odd billionaires, they paid a combined tax last year of £14.5m (with Mr Dyson paying over £8m of that). So the tax situation isn't as bad as it's been proported. When I was living in the States I was told we had high taxes all the time, wasn't so bad when I returned home. Roche-Kerr 04:16, 20 December 2006 (UTC)

[edit] Top rate income tax

I was reading The Economist last night and it said something about a top income tax rate of 95% or so prior to Thatcher in the 70's in the UK. Is this anyway correct? Did I misinterpet it? The curiosity is really bugging me! Can anyone explain? CGorman 20:02, 13 September 2005 (UTC)

Yes, the top rate of tax on investment income (not earned income though) was 95% for some years. This was because 'Investment Income Surcharge' of, I think, 15% was added to the actual top rate of tax of 80% in those years. SandalsMan 17:44, 29 September 2005 (UTC)

Wow, thats unbelievable! Thanks. CGorman 20:20, 29 September 2005 (UTC)

My pleasure! Anything further you wish to know, just let me know! SandalsMan 20:39, 29 September 2005 (UTC)

As the beatles said - There's one for you, nineteen for me 'cause I'm the taxman, yeah, I'm the taxman' 212.149.48.43 14:03, 22 February 2007 (UTC)

I'm so glad to see this topic already in the discussions because I planned to add a comment and CGorman's question seems to validate my comment/request which is......

This whole entry is about today. Wouldn't it be valuable to add some historic data about previous tax regimes in the UK and how it has changed over time? As an encyclopedia entry the trends and history are equally as interesting as a snapshot of today's policies. I'm sorry I can't contribute to the content, I came here hoping to find the info I suggest, and as it happens SandalsMan's contribution here gave me exactly what I was looking for (thanks SandalsMan!) but it would have been good if it was in the main entry.

- Julian

I'd agree with that Julian, the history of how the whole taxation system has evolved would be very valuable - I personally don't cureently have either the expertise or time to help on this one, but I hope someone follows up on it. CGorman 23:03, 16 January 2006 (UTC)

The top rate referred to above (for certain types of passive income on top earners) actually reached 98% at some stage. Mind you, some countries have at times had rates in excess of 100%, so 98% might seem positively generous in comparison. Incidentally, much of the history, at least of the basic structure of income and corporation tax, is hidden away at Schedular system of taxation, jguk 23:28, 16 January 2006 (UTC)

[edit] Company domicile

I am not sure the paragraph on Company Domicile (starting "A company is resident in the UK...") makes sense with regard to the last two sentences. The article says: "A company is domiciled in the UK if it is incorporated in the UK." then the next sentence says: "A company's domicile has no effect on its tax position - it pays tax on its worldwide income and gains." I am not an expert on that aspect of company tax, but I think the final sentence should read something like: "A company incorporated in the UK, and therefore UK domiciled, pays tax on its worldwide income and gains." As it stands, if I am reading the final sentence correctly, there would be no need for the preceeding sentence, but the remaining last sentence would not be quite correct; a non-domiciled (ie non-UK incorporated) company does not pay tax on its worldwide income and gains in the UK so far as I know. SandalsMan 20:58, 29 September 2005 (UTC)

I'm not sure that the "domicile" of a company makes much sense from a UK tax standpoint: the critical issue is residence (although incorporation will govern residence for most UK companiesm, since they are automatically resident in the UK for tax purposes under section 66 Finance Act 1988, subject to the transitional provisions in Schedule 7 FA88 and the provisions of double tax treaties which take precedence under section 249 Finance Act 1994). I agree that the article is not phrased particularly well. It really needs a good spring clean. -- ALoan (Talk) 22:59, 29 September 2005 (UTC)

OK I will leave the spring clean to you. You obviously know much more about it than me. SandalsMan 20:00, 2 October 2005 (UTC)

It is UK resident companies that are subject to tax on their worldwide income. It is correct to say that a company's domicile has no effect on its tax position - it is its residency that is important, jguk 23:30, 16 January 2006 (UTC)

[edit] Residence and domicile: Not quite right

I have separated out the first para of the ==residence and domicile== section into two. The first is as correct as you can get without going into pages and pages. The second sounds comprehensive and authoritative and is mostly correct but not completely. Further, it adds nothing to the the first! E.g. it says UK rentals are taxable but we have already said in the 1st para: All UK sourced income is taxable. Yes there are "ifs and buts" but the 2nd goes nowhere near coping with all that. So, I will probably remove the 2nd para soon. Paul Beardsell 23:36, 4 October 2006 (UTC)

Or!?!??!? Is what is written in the now 2nd para correct entirely? Without omission? Is there no further income tax to be paid on UK dividends by non-UK residents? Paul Beardsell 23:48, 4 October 2006 (UTC)

It is pretty much correct. See section 128 Finance Act 1995 - the UK income tax liability of non resident individuals is limited to tax deducted at source on the forms of income falling within s.128(3) (that is, interest, dividends, pensions payments, etc.), plus UK income tax payable by a UK representative within s.126 (i.e. a branch or agency - not "permanent establishment", that concept only applies to companies - through which a trade, profession or vocation is carried on in the UK).

I really ought to look at this article again. -- ALoan (Talk) 09:08, 5 October 2006 (UTC)

Please do. My problem with the 2nd para is that it reads as if the examples given is an exhaustive list, not examples. If the list is exhaustive, fine, let's make that more plain; if not, fine, let's say they're examples. Paul Beardsell 12:20, 5 October 2006 (UTC)

[edit] Income Tax on Knowhow supplied by individuals and converted into equity

Sanjiv swarup 06:34, 25 March 2007 (UTC)

There should be one line describing a real life situation by using the following illustration..

> Say Mr. A (UK resident) has a certain knowhow which he values to be GBP 100 000. > He supplies this to a UK company ( XYZ Ltd.) against receipt of 100000 equity shares (value face value GBP 1 per share ). (not publicly traded company)

Is there any immediate income tax that he needs to pay for this transaction ?

Hi Sanjiv swarup. Is this a question you know the answer to? If so, I encourage you to be bold and write it up, with references so that those who come after you can follow it. A good example can help illustrate technical points. Of course, I don't actually know what technical point this illustrates, it not being my field. Possibly it's an issue of income tax on dividends, followed by income tax on any gains on disposal? Winklethorpe 18:39, 25 March 2007 (UTC)

I have noted your point, and shall attempt to answer them in the independent article

for Income Tax UK‎ In the meantime, I seek permission to move this section there

Sanjiv swarup 14:10, 4 April 2007 (UTC)

[edit] Article organisation

I reverted some changes to the article recently which had placed Capital Gains and residence and domicile under Income Tax.

• in the UK 'income tax' refers to a specific tax on earnt income, not all taxes on income (like national insurance)
• residence and domicile has effects on multiple areas of taxation, not just income tax.

The article could do with some reorganisation but please be careful. GameKeeper 09:54, 26 March 2007 (UTC)

After thinking about it I reverted the capital gains part to be under income tax GameKeeper 13:02, 26 March 2007 (UTC)

[edit] Value Added Tax in the UK

Definition: VAT is a tax that you pay when you buy goods and services in the United Kingdom. Where VAT is payable it's normally included in the price of the goods or service you buy, but not neccessarily all goods attract VAT.

When someone charges VAT they multiply the original price of the item or service by the VAT rate to calculate the amount of VAT to charge. They then add the VAT amount to the net price to give the 'gross' price - the price you pay.

Total Amount payable = (VAT% * Price of item) + Price of the item

Standard rate 17.5%

You pay VAT on most goods and services in the UK at the standard rate currently 17.5 per cent.

Reduced rate 5%

In some cases you pay a reduced rate of five per cent.

Zero rate

There are some goods on which you don't pay any VAT.

Ruzbehraja 06:35, 6 April 2007 (UTC)