UK Law and Practice Contributed by: Roger Gherson, Alfred Gherson, Lisa Uttley and David Tipping, Gherson Solicitors
Gherson LLP 17a-19 Harcourt Street London W1H 4HF Tel: 020 7724 4488 Fax: 020 7724 4488 Email: info@gherson.co.uk Web: www.gherson.com
1. Tax 1.1 Tax Regimes
The top rate of CGT is 24%. There is an annual exempt amount of GBP3,000 above which gains must be reported and tax paid. Non-residents only pay CGT on the following specific assets: • UK-situs assets connected to a person’s UK branch or agency; • interests in UK land; • certain assets (eg, company shares) which derive at least 75% of their value from UK land. Corporation Tax Corporation tax is charged on both the income and capital gains accruing to companies in the UK. Com - panies are subject to their own rules, but the broad outcomes are the same as compared to an individual subject to income tax and CGT. The top rate of corporation tax is 25%, with a reduced rate of 19% for small profits (ie, below GBP50,000). As with income tax and CGT, the scope of corporation tax depends on whether the company is resident. A company is resident in the UK if either of the following conditions is met: • the company is centrally managed and controlled in the UK, meaning that the day-to-day business of the company is managed from the UK (this is a complex question of fact which has been the sub - ject of extensive case law); and • the company is incorporated in the UK.
The UK has multiple taxes that cover a broad range of circumstances. The most important taxes for indi - vidual clients, estates and trusts are outlined below. Income Tax • Income tax is, as the name suggests, a tax on income. Almost all forms of income are subject to tax, including: • income from employment;
• business income; • property income; • dividends; • interest.
The top statutory rate of income tax is 48% in Scot - land and 45% in the rest of the UK. There is a per - sonal allowance of GBP12,570, which is not subject to tax, but it is gradually withdrawn when earnings fall between GBP100,000 and GBP125,140. As a result of this tapering, the effective marginal rate of tax in this bracket is 60%. If a person is resident in the UK under the statutory residence test, they are generally subject to income tax on their worldwide income irrespective of where the income is generated. Non-residents are only sub - ject to income tax on UK-sourced income. Capital Gains Tax (“CGT”) CGT is charged on the gain arising from the disposal of assets. For this purpose, assets include any form of property with very narrow exceptions.
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