UNITED KINGDOM

 

Name of country

UNITED KINGDOM

 Region

Western Europe, islands - including the northern one-sixth of the island of Ireland - between the North Atlantic Ocean and the North Sea; northwest of France

 Population

67.081 million United Kingdom (June 2020 est.)

General Introduction

The United Kingdom has long been a major world power, both economically and politically. London is the world's financial capital, providing an international business environment. The United Kingdom is also known for having some of the world's best educational institutions and an open, international culture.

 Wifi Speed

With an average broadband speed of 51.48Mbps, the UK managed to climb four places in the global ranking in the last year – from 47th in 2020 to 43rd today. Its average speed at the same time last year was estimated at 37.82Mbps.

vi. Electrical outlet

For the United Kingdom the associated plug type is G, which is the plug that has three rectangular pins in a triangular pattern. The United Kingdom operates on a 230V supply voltage and 50Hz.

Per Capita GDP

$41,600 note: data are in 2017 dollars (2020 est.)
$46,400 note: data are in 2017 dollars (2019 est.)
$46,000 note: data are in 2017 dollars (2018 est.)

note: data are in 2010 dollars

 Climate

temperate; moderated by prevailing southwest winds over the North Atlantic Current; more than one-half of the days are overcast

 Residence-by-Investment

The Tier 1 Investor visa necessitates a substantial financial investment in the United Kingdom. To be eligible, applicants must have held no less than GBP 2 million in their possession for at least two years prior to the initial application.

Investment

Entrepreneur visa (Tier 1). The Entrepreneur visa (Tier 1) category closed to all new applicants on 29 March 2019. It has been replaced by the new Innovator visa. In limited circumstances, it remains open for migrants who already have leave under Tier 1 (Entrepreneur) or Tier 1 (Graduate Entrepreneur) categories.
For details on qualifying circumstances, please refer to the Home Office's most recent Tier 1 (Entrepreneur).

Innovator visa. The innovator route replaces the Entrepreneur visa (Tier 1) category and is intended for experienced businesspeople who intend to create or run a business in the UK. Applicants must be awarded 70 points, of which 50 points must be from the new "new business" criteria or "same business" criteria, but not both.
To qualify for entry clearance as a migrant endorsed for a new business, applicants must meet the following requirements:

  • Endorsement: applicants must obtain an endorsement from one of the Home Office-approved bodies. Endorsements must provide general applicant, business, and endorsing body information, assess that the business is innovative, viable and scalable and confirm that the applicant will devote their working time to the venture.
  • Investment funds: applicants must evidence that they have invested or have available to invest in their new business a minimum of GBP50,000 by one of the following means:
    an endorsement letter from the endorsing body confirming the funds; a signed declaration from a UK organisation employing a minimum of ten people stating the relationship with the applicant, the amount of funds being made available and that those funds are to be used solely for the business; a signed declaration from an overseas organisation, UK organisation employing fewer than ten people or an individual stating the relationship with the applicant, the amount of funds being made available and that those funds are to be used solely for the business, as well as a letter from a legal representative confirming the authenticity of the declaration and signature and a bank letter confirming the funds are held in a regulated financial institution; evidence of applicant funds through bank statements or a bank letter; or evidence of funds already invested in the business through business accounts or bank statements.

English language skills must be demonstrated by one of the following:

  • evidence that the applicant is a citizen of a majority English speaking country;
  • passing an English language test (level B2 or higher of the Council of Europe's Common European Framework for Language Learning);
  • holding a UK bachelor's degree or higher (or foreign equivalent); or
  • having received previous permission as a migrant in a qualifying category.
  • Maintenance: evidence of at least GBP1,270 (and up to an additional GBP315 per dependant) of personal funds, held for a minimum of 28 consecutive days before applying for the innovator visa, or before applying to extend or to switch to the innovator visa if the applicant has been in the UK for less than 12 months. Alternatively, approved endorsing bodies can confirm that they have awarded sufficient maintenance funds in the applicant's endorsement letter. Applicants who are applying for permission to stay and have been living in the UK with permission for at least 12 months on the date of application automatically satisfy the financial requirement.
  • Age: applicants must be 18 or older on the date of application.
  • Initial entry clearance and applications to switch into the category can be granted for up to three years. Leave to remain can be granted for up to an additional three years. The applicant can apply for settlement after spending three years in the UK with permission on the Innovator route.

Tier 1 (Graduate Entrepreneur).

Tier 1 (Graduate Entrepreneur) closed to all new applicants on 6 July 2019. In limited circumstances, it remains open for migrants who already have leave under the category. Tier 1 (Graduate Entrepreneur) has been replaced by the new start-up category (see below).Start-up visa. The start-up category is intended to replace the Tier 1 (Graduate Entrepreneur) category and is for new entrepreneurs who intend to start a business in the UK for the first time. Applicants must be awarded 70 points to qualify for the start-up route.

To qualify for entry clearance, applicants must meet the following requirements:

  • Endorsement: applicants must obtain an endorsement from one of the Home Office-approved endorsing bodies. Endorsements must provide general applicant, business and endorsing body information, assess that the business is innovative, viable and scalable and confirm that the applicant will devote their working time to the venture.
  • English language skills must be demonstrated by one of the following: evidence that the applicant is a citizen of a majority English speaking country; passing an English language test (level B2 or higher of the Council of Europe's Common European Framework for Language Learning); holding a UK bachelor's degree or higher (or foreign equivalent); or having received previous permission as a migrant in a qualifying category.
  • Maintenance: evidence of at least GBP1,270 (and up to an additional GBP315 per dependant) of personal funds, held for a minimum of 28 consecutive days before applying for entry clearance or if the applicant has been in the UK for less than 12 months at the date application. Alternatively, approved endorsing bodies can confirm they have awarded sufficient maintenance funds in the applicant's endorsement letter. Applicants who are applying for permission to stay and have been living in the UK with permission for at least 12 months on the date of application automatically satisfy the financial requirement test.
  • Age: applicants must be 18 or older on the date of application.
  • Initial entry clearance can be granted for up to two years. Start-up visa holders can spend a maximum of two years in the UK, even if they are granted a new visa with a new endorsement body. It is not possible to extend the start-up visa, but individuals may be able to switch to the innovator route if they meet the relevant requirements (see above). Any time spent in the UK on a Tier 1 (Graduate Entrepreneur) visa counts towards the two years on the start-up visa.

Investors

Tier 1 (Investor)

The Tier 1 (Investor) category is for wealthy individuals seeking to make a significant financial investment in the UK. To qualify to enter, applicants must score at least 75 points by having at least GBP2 million of their own money to invest that is disposable in the UK and held in a UK regulated financial institution. There are no English language or maintenance requirements for entry under this category. Initial leave can be granted for up to three years plus four months. After this, migrants can apply to extend their stay for between two and three years depending on their previous permission. Tier 1 (Investor) visa holders can apply for settlement after two, three or five years depending on the level of investment they make in the UK.

Business Visitors

In April 2015, the UK's 15 separate visitor routes were consolidated into four main categories, with the majority falling under the umbrella "Visit (standard)" visa route.
While visitors were previously restricted to a narrow set of activities within the limited scope of their specific visa category, with the new business visitor scheme, individuals can undertake a variety of activities under the Visit (standard) visa, including business activities. The four current routes include:

  • Visit (standard) consolidating the majority of previous visitor categories (see below).
  • Marriage or civil partnership visit.
  • Permitted Paid Engagements (PPE) visit (see below).
  • Transit visit.

Requirements are as follows:

  • Visit (standard). To qualify, individuals must: intend to leave the UK at the end of their visit; not remain in the UK for extended periods through repeated, consecutive visits or make the UK their primary residence; genuinely seek entry for a permitted purpose; not undertake prohibited activities; and have sufficient funds for the duration of their stay without working or requiring public assistance.

Individuals can come to the UK as a Visit (standard) visitor to undertake business activities for up to six months in any 12-month period. They can apply for a visa visit for one of the following:

  • Six months;
  • Two years;
  • Five years;
  • Ten years;

Unless expressly permitted in the rules, business visitors are prohibited from working while in the UK or being paid by a UK source (with limited exceptions). However, business visitors can receive reasonable expenses to cover travel, room and board. Individuals entering the UK for business under the Visit (standard) route should familiarise themselves with the permissible activities and types of payment, as a breach can result in refusals of entry, curtailment of leave and future re-entry bans.

Permitted Paid Engagement visits. Professionals who have been invited to the UK to conduct specific activities related to their specialty profession can enter and work in the UK for up to one month. Individuals qualify if they:

  • meet the general requirements for Visit (standard) visitors in paragraphs V4.2-V4.6 of Appendix V of the Immigration Rules;
    arrange their engagement before travelling to the UK;
  • declare the permitted paid engagement in their application;
  • evidence a formal invitation;
  • demonstrate that their UK paid engagement is related to their area of expertise and occupation overseas;
  • are age 18 or older on the date of application; and
  • intend to engage in one of the pre-approved activities for which they were invited to come to the UK, including as an academic, expert in their field to lecture, overseas pilot examiner, lawyer or professional artist, entertainer, musician, or sportsperson.
  • Leave in this category can be granted for a single period of up to one month. Extensions are prohibited.
  • Other

Graduate visa

The new graduate route opened on 1 July 2021 and essentially reintroduces the Tier 1 Post Study Work category that was abolished in 2012. It allows international students who have completed a course of study at UK bachelor's degree level or higher to stay and work in the UK for at least two years.

To qualify for the graduate visa, applicants must:

  • be in the UK;
  • hold a valid Tier 4 or student visa at the time of application;
  • have studied a UK bachelor's degree, postgraduate degree, or other eligible qualification in the UK for a minimum period; and
  • have successfully completed their course during the last grant of permission to study as a student.
  • Applicants who meet the above requirements will have the necessary 70 points to qualify for the graduate visa.

This category is unsponsored and there are no English language, maintenance, or salary requirements. Graduate visa holders are permitted to engage in most types of work (including self-employment and voluntary work) but are not allowed to take up work as a professional sportsperson, or access public funds or the state pension. Individuals are allowed to study on the graduate visa but not on a course that is eligible for the student visa.

Graduates who have a PhD or other doctoral qualification are granted three years' leave. All other eligible qualification holders are granted two years. Graduate visa holders can switch to the skilled worker route if they meet the relevant requirements

Time spent on the graduate visa does not lead to settlement in the UK, but it can count towards ten years' lawful residence in the UK for indefinite leave to remain (ILR) purposes.
Global Talent visa. The Global Talent visa replaced the Tier 1 (Exceptional Talent) category on 20 February 2020. Applicants who hold a valid Tier 1 (Exceptional Talent) endorsement can use this endorsement for entry clearance or leave to remain under the Global Talent category. Individuals who hold Tier 1 (Exceptional Talent) leave and wish to extend their stay, must apply under the Global Talent route.

The Global Talent route is for individuals aged 18 or over who can demonstrate exceptional talent or promise in science, engineering, humanities, medicine, digital technology or arts and culture. Individuals require 70 points to apply for entry clearance or permission to stay under the this route.

This category involves a two-stage application process:

  • Applying for an endorsement from an expert UK organisation (endorsing body).
  • Applying to the Home Office for entry clearance or permission to stay.

The endorsement criteria vary depending on the area of expertise. Individuals who win a qualifying prize do not require an endorsement.

Individuals under this category are allowed to engage in most types of work (including self-employment and voluntary work) but are not allowed to be employed as a professional sportsperson. Study is also permitted.

Initial clearance is granted for up to five years under this category. There is no limit to the number of times the visa can be renewed. Each extension lasts from one to five years, depending on the applicant's wishes. Global Talent visa holders can apply for ILR in the UK after three or five years, depending on the field of expertise and how the individual applies.

Natural Resources

coal, petroleum, natural gas, iron ore, lead, zinc, gold, tin, limestone, salt, clay, chalk, gypsum, potash, silica sand, slate, arable land

Ethnic Groups

White 87.2%, Black/African/Caribbean/black British 3%, Asian/Asian British: Indian 2.3%, Asian/Asian British: Pakistani 1.9%, mixed 2%, other 3.7% (2011 est.)

Languages

English

note: the following are recognized regional languages: Scots (about 30% of the population of Scotland), Scottish Gaelic (about 60,000 speakers in Scotland), Welsh (about 20% of the population of Wales), Irish (about 10% of the population of Northern Ireland), Cornish (some 2,000 to 3,000 people in Cornwall) (2012 est.)

Religion

Christian (includes Anglican, Roman Catholic, Presbyterian, Methodist) 59.5%, Muslim 4.4%, Hindu 1.3%, other 2%, unspecified 7.2%, none 25.7% (2011 est.)

Median Age

total: 40.6 years
male: 39.6 years
female: 41.7 years (2020 est.)

Urbanization

urban population: 84.2% of total population (2021)
rate of urbanization: 0.8% annual rate of change (2020-25 est.)

 Physician density

2.81 physicians/1,000 population (2018)

Government type

parliamentary constitutional monarchy; a Commonwealth realm

Unemployment Rate

3.17% (2019 est.)
2.51% (2018 est.)

Taxes

Headline Personal Income Tax Rate (highest marginal tax rate) - 54%, (40% Income Tax for £50,271 to £150,000 + 12% Class I NI for £797 to £4189 pm , + 2% Class I NI for over £4189 pm) 59% (over £150,000)

Headline Corporate Income Tax Rate (excluding dividend taxes) - 19%

Tax Resident

Under domestic law, companies incorporated in the UK are automatically treated as UK resident (subject to the exception in the next paragraph). Companies incorporated outside of the UK are treated as UK tax resident if their central management and control (CMC) is exercised in the UK. CMC is a concept developed by case law and is similar but not identical to the place of effective management test which is found in many double tax treaties based on the OECD Model Tax Convention. In essence, CMC is found where the strategic decisions relating to the company's business are taken. Normally, this is at board meetings, but the UK courts have on occasions found that a company's CMC was exercised elsewhere than at board meetings.

If a company would otherwise be resident in the UK under domestic law, but under the tie-breaker rule in a relevant tax treaty is treated as resident in the other contracting state, it is treated as not resident in the UK under domestic law as well.

Resident companies are chargeable to corporation tax on their worldwide profits, defined as income and chargeable (capital) gains. However, the UK has moved towards a more territorial basis for taxing profits in the last ten years and has an exemption for qualifying distributions (which includes most foreign dividends) and also allows a company to elect (subject to certain conditions) for the profits (and losses) of its foreign PEs to be left out of account in calculating its taxable profits (commonly referred to as the foreign branch exemption election).

Charities are generally exempt from taxes on income and gains, as long as those income and gains are applied for charitable purposes. The main exception relates to trading income, which is taxable unless it arises from a trade that is exercised in the course of carrying out the primary purpose of the charity, or a trade that is mainly carried on by its beneficiaries.

Non-Tax Resident

Under domestic law, a non-UK tax resident company is within the charge to corporation tax on income only if it:

  • Carries on a trade of dealing in or developing UK land.
  • Carries on a trade in the UK (other than a trade the above point) through a PE in the UK.
  • Carries on a UK property business.
  • Has other UK property income.

The charge relating to UK PEs attracts trading income arising directly or indirectly through or from the PE, income from property or rights used by, or held by or for, the PE, and capital gains from the disposal of assets used by the PE (for example, property used in the UK trade).

There is no general force of attraction principle in UK tax law. The charge to corporation tax is calculated by applying the profit attribution principles set out in the legislation which include the "separate enterprise principle" which is the cornerstone of the OECD guidance on attribution of profits to PEs.

The treatment of non-resident companies trading in the UK generally follows the same rules that apply to resident companies. However, if a non-resident company ceases to trade in the UK through its PE, or removes an asset from the UK, there is a deemed disposal by which unrealised capital gains become chargeable.

Additionally, under domestic law where a non-UK resident company does not have a PE in the UK but does have UK source income, the income is in general subject to income tax (instead of corporation tax). For many types of income, where no form of withholding applies the income is exempted from the tax charge. However, income from a trade carried on by the non-UK resident wholly or partly in the UK does not benefit from such an exemption, and therefore, in the absence of a PE, is subject to income tax. This charge to tax will normally not apply where there is an applicable tax treaty, as in such a case, if there is no PE as defined in the treaty, in general the profits of the trade will be taxable only in the state of residence.

Corporation Tax

Companies are subject to corporation tax, which is levied on their profits and other forms of income, and on chargeable (capital) gains made by companies. Corporation tax is an annual tax and the financial (corporation tax) year runs from 1 April to 31 March. The main rate is currently 19%.

The main rate will increase to 25% for companies with profits exceeding GBP50,000 from the financial year beginning on 1 April 2023.

From that time, the current rate of 19% (renamed the small profits rate), will apply only to companies with profits not exceeding GBP50,000 with a tapered rate for profits between GBP50,000 and GBP250,000.

Corporation tax returns must be filed annually: the filing deadline is 12 months after the end of the accounting period.

Penalties apply to late filing of corporation tax returns and interest charges apply to late paid corporation tax.

Special rules apply to companies deriving profits from North Sea oil and gas activities and banking companies are subject to a surcharge, treated as additional corporation tax, of (currently) 8% of the excess of certain profits over a specified allowance.

The UK corporate rate of 19% currently applies to NI company profits.

There are no state or local taxes on corporate profits.

Diverted Profits Tax (DPT)

DPT applies at a rate of 25% (or 33% for taxable profits of certain banking companies (reflecting the 8% the banking surcharge), or 55% for certain profits oil and gas activities) to profits diverted away from the UK, typically by large multinational enterprises. The rules target transactions or overseas entities lacking economic substance and transactions structured to exploit permanent establishment (PE) rules.

DPT will increase to 31% when the main corporation tax rate increases to 25% (but the higher rates for banking companies oil and gas activities will not increase to reflect this.
DPT is not self-assessed, HMRC raises a charging notice if it determines that DPT applies. However, taxpayers must notify HMRC if they are potentially within the scope of DPT within three months of the end of the relevant accounting period. Failure to notify has penalty implications.

Employer National Insurance Contributions (NICs)

Employer NICs are a part of the cost of employment. Class 1 NICs are paid for each employee at a rate of 13.8% of salary and certain benefits above a certain threshold. Employers are also liable for Class 1A NICs on other taxable benefits provided to employees at a flat rate of 13.8% with no threshold. The rates of Class 1 and Class 1A employer NICs and any applicable thresholds are set annually.

Apprenticeship Levy

An annual apprenticeship levy is payable by employers, charged at a rate of 0.5% on payroll costs exceeding GBP3 million.

Bank Levy

The bank levy is an annual tax on the balance sheet equity and liabilities of UK banks, banking sub-groups, building societies and building society groups, and foreign banking groups operating in the UK through PEs and subsidiaries.

For chargeable periods ending on or after 1 January 2021, the bank levy is restricted to UK branches and UK resident companies, with an option to exclude a proportion of the balance sheet attributable to foreign branches of UK resident companies.

The levy does not apply to the first GBP20 billion of chargeable equity and liabilities. The bank levy rates applicable for 2021 are 0.10% on short term liabilities and 0.05% on long term equity and liabilities.

Business and Cumulo Rates

Business rates are charged on the occupation of non-domestic property, including shops, offices, warehouses and factories. Local authorities generally collect these. Business rates are based on the rateable value of the property (set by the Valuation Office Agency and a multiplier set by central and devolved governments. Rateable values are reassessed every five years based on market rents. Business rates include cumulo rates which are non-domestic rates paid on rateable network assets by utility and telecom companies (such as pipelines and cables).
A fundamental review of the system began in 2020. The final report is expected in autumn 2021.

VAT

A comprehensive value added tax (VAT) system applies to the supply of goods and services. It is broadly aligned with the EU VAT Directive although the UK is no longer obliged to follow this after its withdrawal from the EU.

VAT is charged in respect of taxable supplies within the UK and the importation of goods. The main rate is 20%. Certain supplies are exempt (no VAT applies to the supply but no input VAT can be reclaimed), while others are subject to a reduced rate of 5%. There are also various zero-rated supplies meaning that no VAT is charged on the supply, but input VAT can still be reclaimed. Exports are zero-rated as are supplies of several commodities including foodstuffs, books, newspapers, e-publications .

A taxable person is a person who is required to be registered for VAT purposes. A registration threshold applies based on the combined value of taxable supplies at the end of any month exceeding GBP85,000 for the preceding 12 months, or there being reasonable grounds for believing that the value of taxable supplies to be made in the following 30 days alone will exceed that threshold. A person making or intending to make taxable supplies can apply for VAT registration even if their taxable supplies fall under the registration threshold. Non-established businesses making supplies in the UK must immediately register for VAT regardless of their turnover. A refund scheme exists for non-registered businesses incurring UK VAT.

Businesses generally file VAT returns and pay associated VAT on a quarterly or monthly basis. The deadline for submitting returns online and paying HMRC are usually the same - one calendar month and seven days after the end of a VAT accounting period. There are VAT grouping rules which may be beneficial if businesses are operating through a number of UK subsidiaries.

Customs Duty

Customs duty is chargeable on products imported into the UK. The rate depends on the product This may be reduced (including to zero) if a free trade or similar agreement exists between the UK and the country of import.

Excise Duty

Excise duties are levied on particular classes of goods, whether imported or domestically produced. Most excise receipts derive from hydrocarbon oils, alcoholic drinks and tobacco. These taxes are generally borne by the consumer as a cost component of those products and businesses trading in them remit the taxes.

Stamp Duty and Property Transaction Taxes

There are five forms of stamp tax on the transfer of property:

  • Stamp duty.
  • Stamp duty reserve tax (SDRT).
  • Stamp duty land tax (SDLT), applying to the transfers of interests in UK land and buildings outside Scotland and Wales.
  • Land and buildings transactions tax (LBTT), applying to transfers of interests in Scottish land and buildings.
  • Land transaction tax (LTT), applying to transfers of interests in Welsh land and buildings
  • Stamp duty and (SDRT) are, broadly payable on the purchase of shares and securities. Interests in shares and securities and options relating to them may also be subject to stamp duty and SDRT. Stamp duty applies to paper transactions (completed by a physical instrument such as a stock transfer form) and SDRT applies to paperless transactions (for example electronic transfers) and is triggered when there is an unconditional agreement to transfer the shares or securities.

The standard rate of stamp duty and SDRT is 0.5% but a higher rate of 1.5% applies on transfers into a depositary receipt scheme or a clearance service.
SDLT, LBTT and LTT apply to transfers of interests in land and buildings. Different rates and bands apply depending on the type of property (residential, non-residential or mixed use) and transaction value. When residential property in England is bought by a company (or similar entity) for over GBP500,000, a 15% rate applies unless certain specific business use reliefs apply.

Annual Tax on Enveloped Dwellings

An annual tax on enveloped dwellings is payable by a company (or similar entity) owning an interest in residential property with a value of more than GBP500,000. Tax is charged in bands dependent on the property interest's value. Certain business use reliefs can apply.

Other Taxes

There are a number of other consumption and environmental taxes in the UK, but these will typically make up a much smaller proportion of the tax burden of most companies. Examples of consumption-based taxes include insurance premium tax air passenger duty and vehicle excise duty. Examples of environmental taxes include landfill tax and the climate change levy.
There are also specific taxes in the gambling sector.

Double tax Treaty Provisions

The UK has an extensive network of tax treaties many of which provide for reduced rates of withholding tax on interest ranging from 0% to 15%. The details of each treaty and entitlement of the beneficial owner to treaty benefits need to be checked carefully. Advance clearance from HMRC is required before a reduced treaty rate of withholding can be applied to interest payments.

Related Posts