A quick guide to UK taxes

Know your enemy

When Sir Geoffrey Howe was Chancellor of the Exchequer in the 1980’s, he once boasted that he abolished a tax at every Budget.  Unfortunately, his successors didn’t continue with this good work, and indeed have reversed it! 

Not all of these taxes, new and old, are going to be of relevance to the average owner managed business or personal investor.  For example, the Diverted Profits Tax was specifically aimed at multinationals setting up “clever” structures to move their worldwide profits to tax havens, and I don’t suppose there will be many finance directors of oil companies combing these pages to find out more details about Petroleum Revenue Tax.  And the same applies to insurance premium tax and the whole host of excise duties, where either OMBs aren’t affected by them, or they have no real scope to make savings by doing things differently.

Instead of turning this into a boring textbook I’m going to single out the taxes which are a real threat, and which you’re likely to be able to do something about. 

What I’ll be doing here is giving an overview of each tax by way of introduction, and just looking at a few straightforward ways of planning to reduce your exposure to the tax.  There is a lot more detail about specific tax planning ideas in our other Tax Planning Special Reports, but you can’t run before you can walk, and this report is intended as a foundation on which to build the rest of your tax planning structure.

So, what are the main taxes which pose a threat to your financial health as a businessman or investor?  In rough order of importance, these are:

• Income Tax

• National Insurance

• Corporation Tax

• “Loans to Participators” Tax

• Capital Gains Tax

• Inheritance Tax

• VAT

• Business Rates

• Stamp Duty Land Tax

• The Annual Tax on Enveloped Dwellings