UK Taxes – Why you should live in Northern Cyprus

In the UK, citizens pay a range of taxes—direct and indirect—at the national and local levels. Below is a detailed breakdown of all the main types of taxes UK residents typically encounter:

1. Income Tax

Who pays it? Anyone earning above the personal allowance threshold (£12,570 as of 2025).

How much?

Income Band	Rate
Up to £12,570	0% (Personal allowance)
£12,571–£50,270	20% (Basic rate)
£50,271–£125,140	40% (Higher rate)
Over £125,140	45% (Additional rate)

Note: Personal allowance tapers off for those earning over £100,000.

2. National Insurance Contributions (NICs)

Who pays it? Employees, employers, and self-employed individuals.

Rates for employees (Class 1, 2025):

Weekly Earnings	Rate
Below £242	0%
£242–£967	8%
Over £967	2%

Self-employed pay:

• Class 2: Flat rate (£3.45/week in 2024–25 if profits are above £12,570).

• Class 4: 9% on profits between £12,570–£50,270, then 2% above that.

3. Value Added Tax (VAT)

What is it? A consumption tax on most goods and services.

Rates:

• Standard rate: 20%

• Reduced rate: 5% (e.g. home energy, children’s car seats)

• Zero rate: 0% (e.g. most food, children’s clothing)

4. Council Tax

Who pays it? Households, based on property value and location.

Band system:

• Band A (lowest) to Band H (highest)

• Charges vary by local authority and include waste collection, local services, and education.

Discounts/exemptions:

• Single occupancy: 25% discount

• Full-time students: exempt

• Low-income or certain benefits: possible reductions

5. Capital Gains Tax (CGT)

Who pays it? Anyone who profits from selling an asset (e.g. property, shares) outside tax-free allowances.

Rates (2025):

• Basic rate taxpayers: 10% (or 18% on residential property)

• Higher/additional rate taxpayers: 20% (or 24% on residential property)

Annual CGT exemption: £3,000 (as of 2025)

6. Inheritance Tax (IHT)

Who pays it? Charged on estates over a certain value when someone dies.

Threshold:

• £325,000 (nil-rate band)

• Up to £500,000 if passing home to direct descendants

Rate:

• 40% on amount above threshold

• Reduced to 36% if 10% of estate is left to charity

7. Stamp Duty Land Tax (SDLT)

Who pays it? Buyers of property in England and Northern Ireland.

Rates (residential, 2025):

Property Price	Rate
Up to £250,000	0%
£250,001–£925,000	5%
£925,001–£1.5 million	10%
Over £1.5 million	12%

Different rates apply for second homes and buy-to-let properties.

8. Alcohol and Tobacco Duties

Already mentioned briefly, but further detail:

• Beer: ~19p–34p per pint depending on strength

• Wine: ~£2.67 per 750ml bottle (standard strength)

• Spirits: ~£31.64 per litre of pure alcohol

• Cigarettes: ~£6.33 per pack of 20 (plus VAT)

• Petrol duty: ~52.95p per litre

9. Vehicle Tax (Road Tax)

Who pays it? Car owners, based on CO2 emissions and vehicle type.

Rates (2025):

• Zero emissions: £0

• Petrol/diesel: £30–£2,365 (first year), then standard £190/year

• Additional premium on cars over £40,000

10. TV Licence

Who pays it? Anyone watching or recording live TV or using BBC iPlayer.

Cost (2025): £169.50/year

11. Dividend Tax

Who pays it? People receiving dividend income above the £500 allowance (2025).

Rates (based on income band):

• Basic rate: 8.75%

• Higher rate: 33.75%

• Additional rate: 39.35%

12. Corporation Tax

Who pays it? Companies on their profits.

Rate (2025):

• 19% for profits up to £50,000

• 25% for profits over £250,000

• Marginal relief in between

13. Air Passenger Duty (APD)

What is it? A tax charged on passengers flying from a UK airport.

Rates (2025, economy class):

• Domestic flights: £6.50

• Short-haul international (0–2,000 miles): £13

• Long-haul international (2,001–5,500 miles): £87

• Ultra long-haul (over 5,500 miles): £95

  Higher rates for premium cabins (business/first class)

14. Insurance Premium Tax (IPT)

What is it? Tax on insurance premiums (except life insurance).

Rates:

• Standard rate: 12%

• Higher rate (travel, electrical appliance cover, etc.): 20%

 15. Business Rates

What is it? Tax on non-residential properties like offices, shops, pubs, warehouses.

• Paid by business occupiers or owners of vacant properties.

• Calculated based on rateable value (assessed by the Valuation Office Agency).

16. Student Loan Repayments (quasi-tax)

How it works: Deducted like a tax once income exceeds thresholds.

Plan Type	Threshold (2025)	Rate
Plan 1	£24,990	9%
Plan 2	£27,295	9%
Plan 4 (Scotland)	£27,660	9%
Postgrad Loans	£21,000	6%

17. Congestion Charges

Charged for driving in certain cities.

• London Congestion Charge: £15/day (7am–6pm weekdays)

• Ultra Low Emission Zone (ULEZ): £12.50/day for older vehicles

• Clean Air Zones (CAZ): Operate in cities like Birmingham, Bath, Bristol

18. Landfill Tax

Who pays? Businesses and local authorities disposing of waste in landfill.

Rates (2025):

• Standard rate: £103.70 per tonne

• Lower rate (inert waste): £3.30 per tonne

19. Climate Change Levy (CCL)

Who pays? Businesses using electricity, gas, or solid fuels.

• Designed to encourage energy efficiency.

• Domestic users are exempt.

20. Aggregates Levy

What is it? Charged on commercially exploited rock, sand, gravel.

Rate (2025): £2.00 per tonne. Applies mainly to the construction and quarrying industries.

21. Soft Drinks Industry Levy (Sugar Tax)

What is it? A tax on producers and importers of sugary drinks.

Rates:

• 5–8g sugar per 100ml: 18p per litre

• Over 8g sugar per 100ml: 24p per litre

22. Plastic Packaging Tax

What is it? Charged on plastic packaging that contains less than 30% recycled content.

Rate (2025): £217.85 per tonne

23. Betting & Gaming Duty

Includes:

• Remote Gaming Duty: 21% of profits

• General Betting Duty: 15%

• Pool Betting Duty: 15%

• Machine Games Duty: 5–20% based on stake and prize level

24. Vehicle-Related Levies

• HGV Levy: Charged on lorries over 12 tonnes using UK roads

• Vehicle Registration Fee: £55 one-time fee when registering a new car

25. Customs and Import Duties

Who pays? People or businesses importing goods from abroad.

• Varies by product category and country of origin.

• Post-Brexit, many imports from the EU are now subject to these duties.

26. Non-Dom Taxation (Remittance Basis)

• UK residents who are non-domiciled can opt to be taxed only on UK income and foreign income brought into the UK.

• Remittance basis charge applies:

  • £30,000 if resident for 7 out of 9 years

  • £60,000 if resident for 12 out of 14 years

27. Apprenticeship Levy

Who pays? Employers with annual wage bills over £3 million.

• Rate: 0.5% of payroll (with £15,000 annual allowance)

28. Dividend Withholding (Non-Resident)

UK companies paying dividends to overseas shareholders may have tax withheld, depending on double taxation treaties.

29. Digital Services Tax (DST)

Who pays? Large multinational digital companies.

• 2% tax on revenues derived from UK users (e.g. social media, search engines, online marketplaces)