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UK tax and incentives

Understand UK tax rates, generous tax incentives and where to find professional tax advice.

Understand UK tax rates, generous tax incentives and where to find professional tax advice.

Last updated 19 February 2020

Contents

Key benefits

The UK:

  • has the most competitive tax rates in the EU and tax reliefs up to 230%
  • is ranked the most business friendly of Europe’s major economies
  • offers a range of tax relief schemes for businesses and investors
  • has simple personal tax rates that are the lowest of the EU’s major economies

Clear and competitive tax rates

The UK has a single, transparent tax rate of 19% (effective 1 April 2017) for all resident companies. This also applies to overseas companies with a UK branch. This is the lowest rate in the G7 and the joint lowest in the G20.

The UK government has also created a number of regimes and exemptions to attract more overseas businesses, including;

  • elective tax exemption
  • dividend exemption
  • no withholding tax
  • interest deductibility
  • Controlled Foreign Company

Shareholder friendly

Capital Gains Tax rates are low in the UK. The top rate is 20%, with lower rates and reliefs to support entrepreneurial activity. This compares favourably with top rates of 45% in France and Germany, and 33% (or even up to 40% for certain types of asset) in the Republic of Ireland.

Where certain conditions are met, companies can be exempt from Capital Gains Tax on the disposal of companies shares. Substantial Shareholdings Exemption (SSE) was introduced to make the UK more attractive as a holding company location.

Tax reliefs and incentives

The UK government has created a set of venture capital schemes that offer generous tax reliefs for investors, making the UK the best place to start, finance and expand a business in Europe.

The 4 venture capital schemes are the:

  • Enterprise Investment Scheme (EIS)
  • Seed Enterprise Investment Scheme (SEIS)
  • Social Investment Tax Relief (SITR)
  • Venture Capital Trust (VCT)

Research and Development (R&D) tax reliefs offers generous incentives of up to 230% for companies investing in UK research and development projects.

Additionally, the Patent Box offers a 10% Corporation Tax (compared to the usual 19%) on profits from inventions patented in the UK.

Learn more about R&D tax reliefs and the UK’s Patent Box.

A fair tax system

In the UK, the rule of law is respected. Our tax system is fair and tax is expected to be paid. We meet all international tax standards and work with the OECD to counter tax avoidance.

Tax advice for doing business in the UK

You can find more specific tax guidance from Her Majesty’s Revenue and Customs (HMRC). If you’re looking for professional advice, you can find tax accountants, legal professionals and many other private sector businesses in our UK Investment Support Directory

Find out more about UK tax and incentives

UK Investment Support Directory

Guidance on research and development tax relief (GOV.UK)