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flag United Kingdom United Kingdom: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on April 5th and ends on April 4th of the next year.
Accounting Standards
Finance Acts and regulations made under powers given by those Acts have included measures to ensure that companies choosing to adopt International Accounting Standards (IAS) or certain UK standards that are equivalent to IAS to draw up their accounts receive broadly equivalent tax treatment to companies that continue to use “mainstream” UK GAAP (UK Generally Accepted Accounting Practice).
Accounting Regulation Bodies
Financial reporting
International Accounting Standards Board
Accounting Reports
English companies must keep account books where are registered all the operations of the company and establish annual accounts including an annual report, a profit and loss account, a balance sheet, a table of financial flows, an appendix, an opinion of the auditors, a statement upon losses and earnings recorded, the comparison between the movements of interests of the shareholders and a note upon the result on historical costs basis.
Publication Requirements
Financial statements must be prepared annually.
Professional Accountancy Bodies
The Institute of Chartered Accountants in England and Wales
The Association of Chartered Certified Accountants
The Chartered Institute of Public Finance and Accountancy
Certification and Auditing
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. For more information, consult the Audit Commission and National Audit Office (NAO).
Accounting News
Accounting Web
Accountancy magazine

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT)
Tax Rate
20%
Reduced Tax Rate
United Kingdom applies a reduced VAT rate of 5% on certain categories of goods and services, including children’s car seats or social housing, fuel and power supplied to domestic users and charities, installation of energy-saving materials, building materials for certain residential conversions, smoking cessation products, sanitary protection products, grant-funded installation of heating appliances and qualifying security goods.
Other Consumption Taxes
All information are available on the website HM revenue and customs.

Learn more about Service Providers in the United Kingdom on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
20%
Tax Rate For Foreign Companies
The UK has a low-tax, low-allowance system of taxation and the government believes it is important to maintain a competitive tax system.

A UK-resident company is subject to corporation tax on its worldwide profits with credit given for most overseas taxes. A non-UK-resident company is subject to corporation tax only in respect of the profits of its PE in the UK and chargeable gains on assets used or held for the purpose of the trade or PE. If a non-resident company carries on an investment activity in respect of UK sources of income, it will be subject to income tax. A company is UK tax resident if it is incorporated in the UK or, if not incorporated in the UK, if its place of central management and control is in the UK.

Capital Gains Taxation
Profits are taxed at 18% and 28% depending on the level of taxable profits.
Main Allowable Deductions and Tax Credits
Companies may deduct from gross trading profits all expenditure that is wholly and exclusively laid out for the purposes of the trade. Payments of indirect taxes are often deductible, as are most charitable contributions. Complicated provisions apply to deductions for certain employee share and share option schemes that, in general, do not follow the accounting treatment.
Other Corporate Taxes
National Insurance Contributions (NIC), licenses for motor vehicles, municipal property tax (rates). For additional information.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  United Kingdom OECD United States Germany
Number of Payments of Taxes per Year 8.0 12.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 110.0 176.0 175.0 207.0
Total Share of Taxes (% of Profit) 35.5 42.7 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Income tax rate Progressive rate from 20% to 45%
Below GBP 31,865 20%
GBP 31,866 - 150,000 40%
Over GBP 150,000 45%
Allowable Deductions and Tax Credits
Personal allowances.
Expenses incurred in the performance of professional duties.
Some share-incentive, pension and savings schemes may confer tax advantages.
Special Expatriate Tax Regime
Consult HM Revenue & Customs to know the most recent rules.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of tax treaties signed by the United Kingdom
Withholding Taxes
Dividends: 0%, Interest: 20% for nonresidents, Royalties: 20% (rates can be lower if a tax treaty is signed)

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Sources of Fiscal Information

Tax Authorities
HM Revenue & Customs
Other Domestic Resources
UK Trade & Investment
Fiscal information on the UK

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Learn more about Taxes and Accounting in the United Kingdom on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The UK Intellectual Property Office, Department for Business, Innovation and Skills.

The United Kingdom is part of the Agreement of Paris for the protection of industrial property and of the Agreement establishing the World Intellectual property Organization (WIPO). The United Kingdom signed the Patent Co-operation Treaty and the Agreement of Nice.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Act
1977
20 years
Patent Cooperation Treaty (PCT)
Trademark
 
Trademarks Act
1994
10 years Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Design Act
1949
5 years  
Copyright
 
Copyrights, Designs and Patents Act 1988
70 years except for typographical arrangements, where it is 25 years. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty

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Legal Framework

Independence of Justice
Judiciary is completely independent in U.K.
Equal Treatment of Nationals and Foreigners
Britain has large numbers of immigrants and locally born children of immigrants, who receive equal treatment under the law. In practice, their living standards are lower than the national average, and they complain of having come under increased suspicion since the July 2005 terrorist attacks in London and the alleged foiled plot in August 2006.
The Language of Justice
English
Recourse to an Interpreter
In case of penal action, an interpreter should be made available for individuals who do not speak or understand English sufficiently. Interpreters should be registered with the NRPSI (National Register of Public Service Interpreters).
Sources of the Law and Legal Similarities
United Kingdom is a constitutional monarchy based on parliamentary democracy. In the absence of a written constitution, the main source of the law in the country is the common law with early Roman and modern continental influences. Scotland has a separate legal system. UK accepts compulsory ICJ (International Court of Justice) jurisdiction but with reservations. Being a member of the EU, the national law in UK needs to comply with the conditions of the Community legislation.
Checking National Laws Online
British Law - Community information site for citizens and small businesses

Learn more about Lawyers and Legal in the United Kingdom on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
BSI Group, British Standards Institution
Integration in the International Standards Network
The UK is a member body of the International Organization for Standardization and a full member of the International Electrotechnical Commission. It is also a member state of the International Telecommunication Union.
There are also some specific EU standards: European Committee for Electrotechnical Standardization (CENELEC), European Telcommunications Standards Institute (ETSI), European Committee for Standardization (ECS), handling all other standards.
Classification of Standards
There are over 27,000 British Standards in use and 2000 are produced annually. CE is the European certification mark. It is compulsory for a country to be able to sell on the market.
Online Consultation of Standards
The BSI Shop offers a full catalogue of standards and publications, many of which are available as PDF downloads; on-line catalog of European Standards; ISO catalog; IEC catalog.
Certification Organizations
The United Kingdom Accreditation Service. Follow this link for a list of Certification Body Schedules.

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Business Practices

General Information
Kwintessential Cross-cultural Solutions
Executive Planet
Opening Hours and Days
Banks are generally open Monday to Friday, from 9.30 to 17.00. In the City of London, banks usually close at 17.00 and some are open on Saturday mornings but schedules and services are variable. Most shops have long opening hours and some supermarkets are even open 24 hours a day, with shorter opening hours on Sundays, closing at 4pm or 5pm.
 

Public Holidays

New Year Day January 1st
2nd January 2nd January (Scotland only)
Saint Patrick's Day March 17 (in Northern Ireland only)
Good Friday Friday before Easter
Easter Monday Monday after Easter Sunday (except in Scotland)
Easter Tuesday Tuesday after Easter (Nothern Ireland only)
May Day first Monday of May
Victoria Day 21 May (Scotland only)
Spring Bank Holiday Last Monday of May (except in Northern Ireland, where it is the first Monday of May)
Orangemen's Day 12 & 13 July (Northern Ireland only)
Summer Bank Holiday last Monday of August (except in Scotland, where it is on the first Monday of August)
St Andrew's Day November 30 (in Scotland only)
Christmas Day December 25
Boxing Day December 26
 
Holiday Compensation
If a public holiday falls on a weekend, the following Monday will be a public holiday.
 

Periods When Companies Usually Close

There are no set times when companies close. However, many close between Christmas and New Year.
 

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Last Updates: February 2015