Taxation used to be the most contentious issue in UK politics, that was before the hysteria surrounding Brexit and immigration.
There is no single official number for every minor variation of taxation in the UK, but there are over 100 different applicable taxes in total. The system is generally categorized into a few core types managed by HMRC (His Majesty’s Revenue and Customs), devolved governments, and local councils.
The main types of taxes are broadly categorised as:
Personal Taxes
- Income Tax: A direct tax on an individual’s earnings, including salary, pensions, and rental income. It is the single largest source of government revenue.
- National Insurance Contributions (NICs): Payments made by employees, employers, and the self-employed to qualify for certain state benefits and the State Pension.
- Capital Gains Tax (CGT): A tax on the profit made when an individual sells or disposes of certain assets (like property or shares) that have increased in value.
- Inheritance Tax (IHT): A tax on the property, money, and possessions (the estate) of someone who has died, if the value is above a certain threshold.
Consumption Taxes (Indirect Taxes)
- Value Added Tax (VAT): A consumption tax on most goods and services, generally charged at a standard rate of 20% and included in the final price.
- Excise Duties: Taxes on specific goods, such as alcohol, tobacco, and motor fuel, often used to discourage consumption or offset environmental damage.
- Insurance Premium Tax (IPT): A tax on general insurance premiums.
- Air Passenger Duty: A tax on flying from UK airports.
Business Taxes
- Corporation Tax: A tax on the profits made by limited companies and other associations.
- Business Rates: A tax on non-domestic properties that helps fund local government services.
- Petroleum Revenue Tax and Energy Profits Levy: Taxes specific to the oil and gas industry.
- Plastic Packaging Tax: A tax introduced in 2022 on plastic packaging with less than 30% recycled content.
Property & Land Taxes
- Stamp Duty Land Tax (SDLT): A tax on purchasing property or land in England and Northern Ireland. Scotland and Wales have their own versions (Land and Buildings Transaction Tax and Land Transaction Tax, respectively).
- Council Tax: A locally set tax based on the value of residential property, paid by the occupant to fund local services.
- Vehicle Excise Duty (commonly known as road tax): A tax related to vehicle ownership and emissions.
Other Taxes & Levies
- Aggregates Levy and Landfill Tax: Environmental taxes.
- Gambling Duties: Taxes on betting and gaming.
- Bank Levy and Digital Services Tax: Specific taxes targeting certain financial sectors.
The complexity of the system means the precise number of tax types is hard to pin down, but they all fall under these main categories that fund central and local government services.
