Tax in United Kingdom

Who is the tax authority?

His Majesty's Revenue and Customs (HMRC) is the UK's non-ministerial department for tax administration. It was formed in 2005 by the merger of Inland Revenue and HM Customs and Excise.

HMRC administers Income Tax, Corporation Tax, VAT, Inheritance Tax, Capital Gains Tax, Stamp Duty Land Tax (England and NI), and Petroleum Revenue Tax. It also collects National Insurance contributions and pays certain state benefits.

Scotland and Wales have devolved revenue authorities — Revenue Scotland and the Welsh Revenue Authority — handling the devolved taxes (LBTT, LTT, Scottish/Welsh Landfill Taxes).

What is the UK tax year and the filing deadline?

The UK personal tax year runs 6 April to the following 5 April — a fiscal year, not a calendar year. The 2025/26 tax year covers 6 April 2025 to 5 April 2026.

VAT-registered businesses file quarterly returns (one month plus 7 days after period-end). Corporation Tax returns are due 12 months after the end of the accounting period.

Who is a UK tax resident?

Residency is determined by the Statutory Residence Test (SRT), in force since 6 April 2013 under Schedule 45 of the Finance Act 2013.

The SRT runs through three steps:

• Automatic Overseas Test — conclusively non-resident (e.g., fewer than 16 days in UK if UK-resident in any of the prior three years)
• Automatic UK Test — conclusively resident (e.g., present 183 days or more in the tax year)
• Sufficient Ties Test — UK ties counted against day-count thresholds (family, accommodation, work, 90-day, country ties)

What are the UK personal income tax rates?

For England, Wales, and Northern Ireland in 2025/26:

The Personal Allowance is reduced by £1 for every £2 of adjusted net income above £100,000, fully tapering away at £125,140.

Dividend income above the £500 Dividend Allowance is taxed at 8.75% (basic), 33.75% (higher), and 39.35% (additional). Capital Gains Tax moved to 18% (basic-rate band) and 24% (higher-rate band) for non-residential gains from October 2024.

How does UK corporate tax work?

Diverted Profits Tax, the Bank Surcharge, and the Energy Profits Levy operate as separate regimes on top of the main rate. The R&D regime was restructured from 1 April 2024 — SME and RDEC schemes merged for most companies.

The UK was an early implementer of OECD Pillar Two. The Multinational Top-up Tax and Domestic Top-up Tax apply for accounting periods beginning on or after 31 December 2023 for groups with global revenue above EUR 750 million.

What about VAT and indirect tax?

Value Added Tax is the UK's principal indirect tax.

The mandatory VAT registration threshold rose to GBP 90,000 of taxable turnover from 1 April 2024. Making Tax Digital for VAT is mandatory for all VAT-registered businesses.

Excise duties apply on alcohol, tobacco, and fuel. Insurance Premium Tax applies on most general insurance. The Plastic Packaging Tax has applied since April 2022.

How is crypto taxed in the UK?

HMRC treats cryptoassets as property. The position is set out in detail in HMRC's Cryptoassets Manual.

For most individuals, gains on disposal of cryptoassets are subject to Capital Gains Tax under the share-pooling rules. Assets of the same type are pooled and disposals matched against the pool's average cost.

Receipt of cryptoassets as employment income, mining rewards, or staking rewards is taxable as ordinary Income Tax at fair market value on receipt.

How does the UK handle tax treaties?

The UK maintains approximately 130 comprehensive Double Taxation Agreements — one of the largest treaty networks in the world.

Most UK treaties follow the OECD Model Tax Convention with UK-specific modifications. The UK has signed and ratified the OECD Multilateral Instrument (MLI), which has modified the operation of many UK treaties without bilateral renegotiation.

Where a UK resident is taxed in another jurisdiction, double-taxation relief is given either by treaty (commonly the credit method) or by domestic Unilateral Relief under TIOPA 2010.

Common penalties and pitfalls

When should you talk to a UK tax pro?

Some situations are simple enough to handle through gov.uk. Others get complicated fast:

• Foreign income or assets — FIG regime / treaty relief / arising basis
• Self-employed or director — SA + Class 2/4 NIC + dividend strategy
• Higher / additional rate — PA taper / pension annual allowance
• Active crypto trading — share-pooling / DeFi / staking treatment
• HMRC enquiry opened — Section 9A / compliance check
• Pillar Two MNE group — €750m+ revenue threshold
• Mid-year move in or out — SRT split-year + double tax relief
• Inheritance Tax exposure — IHT 40% above £325k threshold

You can find vetted UK practitioners through the directory below.

This page is general information. It is not personal guidance for your specific situation. Tax rules change. Always check current figures on the gov.uk website or with a UK-licensed practitioner before filing.