The main rate of UK corporation tax is 25%, applying to companies with profits over GBP 250,000. A small profits rate of 19% applies below GBP 50,000, with marginal relief tapering the rate between the two thresholds. Resident companies are taxed on worldwide profits; non-resident companies are taxed on UK-source trading profits, UK permanent establishment profits, and UK property income and gains.
UK resident individuals (outside Scotland) pay income tax on a banded system after a GBP 12,570 personal allowance, which tapers to zero once adjusted net income exceeds GBP 125,140.
Scotland sets its own income tax bands and rates, which differ from the rest of the UK. Dividend and savings income are taxed under separate rate schedules.
UK tax residency is determined under the Statutory Residence Test (SRT), which weighs days spent in the UK against a set of connecting factors (family, work, accommodation, and prior-year presence). There is no fixed single day-count threshold; someone can become resident anywhere from 16 to 183 days present, depending on how many ties they have to the UK. Domicile is a separate, historically rooted concept that historically affected the taxation of foreign income and gains for UK residents; the remittance basis regime for non-UK-domiciled individuals was replaced by a new residence-based foreign income and gains regime effective from the 2025/26 tax year.
The UK does not use a fixed debt-to-equity thin cap ratio. Instead, interest deductibility is governed by transfer pricing arm's-length principles and the Corporate Interest Restriction (CIR) regime, which generally caps net UK interest deductions at the higher of 30% of UK tax-EBITDA or a fixed GBP 2 million de minimis, subject to a group ratio alternative.
The UK's Controlled Foreign Company rules (Taxation (International and Other Provisions) Act 2010, Part 9A) attribute certain low-taxed profits of non-UK resident companies controlled by UK residents back to the UK parent, subject to a series of gateway tests and exemptions (including low-profit, low-profit margin, and tax-exemption thresholds). The regime targets profits diverted from the UK rather than imposing a blanket attribution of all foreign subsidiary income.
The UK maintains one of the largest double tax treaty networks in the world, with more than 130 comprehensive treaties in force. Treaties generally reduce withholding rates on dividends, interest, and royalties, and provide relief from double taxation and mutual agreement procedures for disputes.
The UK standard VAT rate is 20%, with a reduced 5% rate for specific goods and services (such as domestic energy) and a zero rate for items including most food and children's clothing. VAT registration is mandatory once UK taxable turnover exceeds GBP 90,000 in a rolling 12-month period; voluntary registration is available below that threshold. Since Brexit, the UK operates VAT independently of the EU VAT area, with distinct import VAT and postponed accounting rules for goods entering Great Britain.
The UK does not have an FBAR-equivalent foreign account reporting regime for UK residents; UK residents disclose foreign income and gains through the standard self-assessment return. UK financial institutions report US-connected accounts to HMRC under the UK-US FATCA intergovernmental agreement, and the UK participates in the OECD Common Reporting Standard (CRS) for automatic exchange of financial account information.