Europe · Tax guide

United Kingdom

The United Kingdom taxes company profits at 19% to 25%, the self-employed through Income Tax and National Insurance, and most sales through VAT at 20%. Making Tax Digital is extending quarterly digital reporting to sole traders and landlords from 6 April 2026. Taxes are administered by HM Revenue & Customs (HMRC).

Updated 1 October 2026 · 55 of 55 figures checked against official sources

Check your obligations

At a glance

Corporation Tax
25%

19% on profits up to £50,000

VAT
20%

Registration above £90,000 turnover

Personal allowance
£12,570

Tax-free income for most individuals

Employer National Insurance
15%

Above £5,000 per employee a year

Withholding on interest and royalties
20%

Interest rising to 22% on yearly interest from 6 April 2027; royalties stay at 20%

Global minimum tax
15%

Groups with revenue of €750 million or more

Corporation Tax

Companies pay Corporation Tax at 25% on profits above £250,000 and at the small profits rate of 19% on profits up to £50,000. In between, marginal relief tapers the charge, so each extra pound of profit in that band is taxed at 26.5%. The limits are shared between associated companies.

Register within 3 months of starting to trade. Most companies pay nine months and one day after the year-end and file the return within twelve months; companies with profits above £1.5 million pay in quarterly instalments.

Sole traders and partnerships

Business profits of the self-employed are taxed through Self Assessment. The first £12,570 of income is tax-free; above it, Income Tax is 20%, rising to 40% above £50,270 and 45% above £125,140 (Scotland sets its own bands). Class 4 National Insurance is 6% on profits between £12,570 and £50,270, and 2% above.

Register for Self Assessment by 5 October after the end of the tax year in which you start trading, and file and pay online by 31 January.

  • Making Tax Digital for Income Tax requires digital records and quarterly updates: from 6 April 2026 for qualifying income above £50,000, from 6 April 2027 above £30,000, and from 6 April 2028 above £20,000.

VAT

VAT is charged at 20%, with a reduced rate of 5% on items such as domestic energy and children's car seats, and zero-rating for most food, books and children's clothing. Registration is mandatory once taxable turnover exceeds £90,000 over any rolling twelve months; register within 30 days of the end of the month in which you pass it.

VAT-registered businesses keep digital records and file through Making Tax Digital software. Late payment penalties start 15 days after the due date.

E-invoicing

The government plans to make e-invoicing mandatory for all VAT invoices from April 2029 (planned), using structured invoices exchanged over the Peppol network. HMRC is due to publish the detailed standards before then.

Employers

Employers run PAYE, deducting Income Tax and employee National Insurance from pay and reporting each payment in real time. Employer National Insurance is 15% on earnings above £5,000 per employee a year; most employers can reduce their bill by the Employment Allowance of up to £10,500.

  • Construction Industry Scheme: contractors deduct 20% from payments to registered subcontractors and 30% from unregistered ones, filing a monthly return by the 19th.

Payments abroad, transfer pricing and the global minimum tax

Yearly interest and royalties paid to non-residents carry 20% withholding (rising to 22% on yearly interest from 6 April 2027; royalties stay at 20%), reported quarterly by companies on form CT61. Treaties and the right clearances can reduce the rate. Dividends carry no withholding.

Transactions with related parties must be at arm's length. Small and medium-sized groups (fewer than 250 staff and turnover up to €50 million) are generally exempt from transfer pricing adjustments. Groups with revenue of €750 million or more keep a master file and local file and are subject to the multinational and domestic top-up taxes at 15%. An International Controlled Transactions Schedule applies for periods starting on or after 1 January 2027.

Property

Buyers of property in England and Northern Ireland pay Stamp Duty Land Tax (Scotland and Wales have their own taxes). Non-residential property is taxed in slices: nothing on the first slice, 2% on the middle slice and 5% on the part above the top threshold. Companies and buyers of additional homes pay a 5% surcharge on residential rates, and companies buying a dwelling over the high-value limit can pay a flat 17%.

Product taxes and levies

  • Soft Drinks Industry Levy: 20.8p per litre on drinks with 5 g to 8 g of sugar per 100 ml, and 27.8p at 8 g or more.
  • Vaping Products Duty: from 1 October 2026, £2.20 per 10 ml of vaping liquid, with duty stamps.
  • Plastic Packaging Tax: £228.82 per tonne of packaging with too little recycled plastic, once you make or import 10 tonnes a year.
  • Economic Crime Levy: paid by businesses regulated for anti-money laundering with UK revenue above £10.2 million.

Key dates

  • Monthly, by the 19thConstruction Industry Scheme return
  • QuarterlyVAT returns through Making Tax Digital, and CT61 returns for interest and royalties paid abroad
  • 5 OctoberRegister for Self Assessment, for the tax year in which you started trading
  • 31 JanuaryOnline Self Assessment return and payment
  • Nine months and one day after the year-endCorporation Tax payment (unless paying quarterly instalments)
  • Twelve months after the year-endCompany Tax Return

Figures and sources

55 figures

Indicative only. This assessment is a high-level overview based on the information you provided and UK tax rules for the 2026/27 tax year. It is not tax or legal advice. Consult a qualified UK tax adviser before making compliance decisions.