Taxation overview in United Kingdom

KEY POINTS

• Taxes may be direct or indirect.
• Direct taxes include income tax, corporation tax, capital gains tax, and inheritance tax.
• Indirect taxes include VAT, stamp duty, stamp duty reserve tax, customs duties, excise duties, air passenger duty, insurance premium tax, landfill tax and council tax.
• Tax law is derived from various sources – Acts of Parliament (primary legislation); orders and regulations, usually made by statutory instrument (secondary legislation); European legislation and case law.
• Interpretation of tax law is aided by various non-statutory sources, including statements of practice, extra-statutory concessions, departmental leaflets and pamphlets, Revenue interpretations and decision and internal guidance manuals.
• Tax law distinguishes between items of an income nature and of a capital nature.
• Income and capital gains tax are charged by reference to a year of assessment (or tax year) which runs from 6 April to the following 5 April .
• Corporation tax is charged by reference to financial years. A financial year runs from 1 April to the following 31 March.
• Income tax is a tax on profits or gains of an income nature.
• Capital gains tax is a tax on chargeable gains resulting from chargeable disposals by chargeable companies
• Corporation tax is a tax on profits, including income and capital gains, of a company.
• Inheritance tax is a tax on transfers of value made by individuals, executors and trustees.