ACCOUNTING - VAT - TAX RETURN IN ENGLAND
Development of corporate tax and VAT in England. Accounting and filing a tax return.
The tax system in England
In the UK, the Anglo-Saxon legal system applies, making it different from most European countries. If we wanted to find other countries with such rules, we would have to make a somewhat longer trip. There is a similar situation in the United States, Canada, or Australia. In contrast, the rest of Europe operates a continental tax system.
What is the same? The tax office carries out the thankless task of collecting taxes, which is also a known standard procedure in our country. Similarly, in the UK, there is a well-known distribution of taxes on both direct and indirect. Otherwise, the local tax system has a quite significant specificity. Here, total taxation is one of the lowest in Europe.
Corporate income tax in England
It applies to all legal persons. Although taxes are imposed annually, similar to our country, however, there is one difference here. A year on the Islands doesn’t only mean the period from 1st January to 31st December. The accounting year in the UK may also be offset. At the latest nine months after it's over, you should remember that you have to pay the tax, otherwise you'll have a lot of explaining to do in the appropriate places.
The tax rate ranged around 32.66% on average between 1981 and 2016. This was record high in 1982. At that time it was 52%. On the contrary, the lowest we experienced relatively recently, it managed to climb to just 20%. Future predictions are even more favourable. We will see what the graphs show us after some time. There is ambition here to bring this tax down to 15%. The aim is to help the national economy, which is experiencing a bit of tremor after the Brexit and made a positive step towards the investors.
Value Added Tax (VAT) in England
This is one of the most important revenues in the state budget. The obligation to register for VAT arises once your turnover exceeds 83,000 GBP. However, the good news is that you can use standard tools when calculating taxable profits, including deductible items. The British economy has two VAT rates. The base or standard is now at 20% and is subject to most goods and services. The decreased has a value of 5%. For example, electricity or gas are subject to it. On the other hand, basic foods are completely exempt from tax. Drugs or books are also included in this group.
The payment system may be similar to income tax. This means you can pay annually, but in the UK you are not bound by a strictly defined period in the calendar year.
And how did it go through history? In the period under review, from 1977 to 2016, it has averaged 16.53%. The record low was in 1978, where it stood at only 8%. On the other hand, we have seen the opposite extreme in recent times. In 2011, where it has climbed to 20%.
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Given the above-mentioned specifications that need to be taken into account, you definitely shouldn’t have to go on your own to discover the secrets of the island tax system. For example, you can cause unpleasant delays for yourself by refusing to register voluntarily for VAT and eventually damaging your company's reputation. This is in the phase when it hasn’t actually begun to work. Let us help you with what to do with VAT registration. At the same time, we can help with opening a local bank account.
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