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The United Kingdom (UK), comprising England, Scotland, Wales, and Northern Ireland, is known for its rich history, diverse culture, and influential global economy. As a prominent hub for finance, innovation, and international trade, the UK continues to attract businesses and talent from around the world.
In 2025, a particularly notable trend in the UK market is the significant growth of sustainable and green technologies. Driven by ambitious government targets aiming for net-zero emissions by 2050, there has been substantial investment and innovation in renewable energy, electric transportation, and green finance sectors. This shift presents numerous opportunities for businesses committed to sustainability and environmental responsibility.
In this publication, we provide a key overview of taxes in the UK, to help businesses better navigate the fiscal landscape.
Anyone can purchase real estate in the UK, including both residents and citizens, who face no restrictions on buying residential or commercial property. Overseas buyersโthose who are not UK residentsโare also generally allowed to acquire property in England, Scotland, Wales, and Northern Ireland. However, non-UK residents are subject to additional requirements, such as a 2% surcharge on Stamp Duty Land Tax (SDLT) for residential property purchases, in addition to the standard rates.
Overseas buyers may also find that lenders require larger deposits, typically between 25% and 40%, to secure financing. In some cases, transactions involving agricultural land or heritage properties may require local planning or heritage authority approval. Additionally, companiesโincluding UK-registered businesses, foreign companies with a UK branch, and special-purpose vehicles (SPVs)โcan acquire real estate but must comply with corporation tax and SDLT regulations.
The UK offers several common legal forms for businesses, each with distinct features. A Sole Trader is the simplest structure, owned and operated by one person, with minimal set-up requirements but unlimited personal liability. Partnerships involve two or more individuals sharing both profits and liabilities, governed either by a partnership agreement or the Partnership Act 1890.
For those seeking limited liability, a Limited Liability Partnership (LLP) combines partnership flexibility with protection for its members. LLPs require formal registration with Companies House and allow members to manage the business directly. The Private Company Limited by Shares (Ltd) is the most popular choice for small and medium-sized enterprises (SMEs). Shareholdersโ liability is restricted to unpaid share capital, and the company must submit formal accounts and annual returns.
Public Limited Companies (PLC) can offer shares to the public and are subject to stricter disclosure and governance requirements, including a minimum share capital of ยฃ50,000. Lastly, overseas companies may establish a UK Branch, which operates within the UK but is not a separate legal entity; the parent company remains liable for its obligations.
| Payrolls and Contribution | Employee | Employer |
| Income tax | 20%, 40% or 25% | 0% |
| Social Security contribution | 8% | 15% |
| Social (Pension) insurance contribution | 5% | 3% |
| ย | Main features of employment relationship | Applicable law |
| Contract type | Permanent, Fixed-Term, Part-Time, Zero-Hours, Agency | Employment Rights Act 1996 ย Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 ย Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 ย Conduct of Employment Agencies and Employment Businesses Regulations 2003 ย Working Time Regulations 1998 ย Working Time Regulations 1998 (Regulations 13โ16) ย Employment Rights Act 1996 (notice provisions) ย Employment Rights Act 1996 (sections 86โ89) |
| Contract must include | Names of parties, start date, role and duties, place of work, and remuneration details | |
| Working time | Hours of work (weekly/daily), patterns (shifts, flexitime), rest breaks, and entitlement to rest periods under Working Time Regulations 1998 | |
| Holiday entitlement per year | Minimum 5.6 weeksโ paid leave per year (pro-rated for part-time), plus any contractual enhancements | |
| Trial period | Duration (commonly 3โ6 months), objectives, review process, and notice during probation | |
| Notice Period | Statutory minimum (one week after one monthโs service) or contractual notice (whichever is greater), for both employee and employer |
For the financial year beginning 1 April 2025, UK companies pay Corporation Tax at the following rates:
These thresholds are proportionately adjusted for accounting periods shorter than 12 months or where there are โassociatedโ companies gov.uk.
A company is considered as a UK tax resident, if it is either incorporated in the UK or its business is centrally controlled and managed in the United Kingdom.
Taxable income for UK companies includes profits from trades, professions or vocations carried on in the United Kingdom, together with non-trading investment income such as interest, dividends, and rental income from UK properties. Additionally, profits from the disposal of assets (known as chargeable gains) are included, with allowable costs deducted from the proceeds.
The calculation of taxable income starts with the accounting profit as shown in the companyโs financial statements. Disallowable expenses, such as entertaining costs and fines, are then added back. Allowable deductions and capital allowances are subtracted, and net chargeable gains (after accounting for losses and indexation) are incorporated. Adjustments are made for group relief, loss relief, and controlled foreign company (CFC) charges, in accordance with relevant legislation, including the Corporation Tax Act 2009 and the Corporation Tax Act 2010 (Parts 2 and 3).
Non-resident companies are subject to UK tax only on profits that arise from UK sources. This includes profits generated through a UK permanent establishment, which refers to a branch, office, or any other fixed place of business located in the United Kingdom. In addition, income and gains from UK land or property are taxable regardless of whether the company has a permanent establishment in the UK.
Certain types of income, such as interest, royalties, and branch profits, may be subject to specific withholding tax obligations and branch profit rules. These requirements are set out in the Corporation Tax Act 2010 (Part 5, Chapter 2), the Taxation of Chargeable Gains Act 1992, and the Income Tax Act 2007 (Part 9).
The tax period in the United Kingdom is the accounting period.
Corporation Tax deadlines for UK companies are determined by the end of the accounting period, which is the date to which financial statements are prepared. After identifying your accounting period end date, you have 12 months from that date to submit your Company Tax Return (CT600). For example, if your accounting period ends on 31 December 2024, your CT600 must be filed by 31 December 2025.
The payment of Corporation Tax is due 9 months and 1 day after the accounting period ends. Using the same example, if your accounting period ends on 31 December 2024, your tax payment deadline will be 1 October 2025.
For UK companies, the method of paying Corporation Tax depends on the level of profits. Companies with profits up to ยฃ1.5 million pay their tax in a single payment, due nine months and one day after the end of the accounting period. However, companies with profits above ยฃ1.5 million (with thresholds reduced if the company is part of a group) must make advance payments in the form of quarterly instalments.
Standard large companies, whose profits are above ยฃ1.5 million but do not exceed ยฃ20 million, pay Corporation Tax in four instalments. These are due in the 7th, 10th, 13th, and 16th months following the start of the accounting period. Very large companies, with profits exceeding ยฃ20 million, are required to pay in 12 monthly instalments, each falling one month after the start of the accounting period. Companies with profits not exceeding ยฃ1.5 million generally make a single payment after the period end.
To calculate each instalment, the company should first estimate its total Corporation Tax liability for the period and divide this by the required number of instalments. Each payment is then made on its due date. The final instalment is adjusted to reflect the actual tax liability once the Company Tax Return (CT600) is filed.
There are further considerations for companies with accounting periods shorter than 12 months, as both the number and timing of instalments are adjusted proportionately. In addition, if a company is part of a group, the relevant profit thresholds for instalment payments are divided between the associated companies to determine their payment obligations.
A deductible expense for UK Corporation Tax purposes is any cost that is โwholly and exclusivelyโ incurred in the day-to-day running of your trade. In practice, this means you can generally deduct staff salaries and employer NICs, business-related rent and utilities, office and administration costs (stationery, software, professional fees), marketing and travel expenses (with supporting receipts), repairs that maintain but do not improve assets, training and recruitment fees, and finance costs such as bank charges and qualifying loan interest (subject to the Corporate Interest Restriction rules). These deductions, together with capital allowances on qualifying plant, machinery or fixtures, are offset against your accounting profit to arrive at your taxable profit.
From 1 April 2025 onwards, UK companies may carry forward trading losses indefinitely and set them against future profits of the same trade, subject to the following key rules:
These provisions are set out in Corporation Tax Act 2010 (Part 2, Chapter 3), as amended by Finance Act 2016 (introducing the 50% cap) and remain unchanged for periods beginning in 2025.
UK companies do not withhold tax on dividend distributions to resident shareholders. Individual recipients pay tax on dividend income above their annual allowance.
The rates for 2025โ26 are:
The UK does not levy withholding tax on dividends, interest or royalties paid to non-resident companies under domestic law. Amounts paid are gross, although treaty provisions may override this. Recipients must ensure they meet any treaty conditions to benefit from reduced treaty rates.
All UK dividend distributions to both resident and non-resident corporate shareholders are paid gross with no UK withholding.
Interest paid by UK borrowers to both resident and non-resident lenders is paid gross with no UK withholding, subject to the requirement that the payment qualifies as โinterestโ under UK tax law and any relevant treaty definitions.
Royalty payments from UK sources to non-resident recipients are paid without UK withholding, provided they fall within the domestic definition; some royalty types may be recharacterized if paid in non-ordinary-course arrangements.
The UK applies a range of anti-avoidance measures to counteract tax planning that erodes the UK tax base. Key rules include:
UK resident groups must include in their UK tax base certain profits of controlled foreign subsidiaries where profits are artificially diverted. Main features are:
Any UK entity transacting with associated enterprises on cross-border or UK inland dealings must:
The UK has an extensive network of double tax treaties that:
The personal income tax rates in the United Kingdom are:
Most UK residents benefit from a personal tax-free allowance and a range of specific reliefs that mean not all income is taxed. In addition, certain groups and types of income are entirely exempt from income tax.
The tax period runs from 6th April to 5th April each tax year.
Every individual resident in the UK is entitled to the personal allowance, which is the amount of income they can receive each tax year without paying income tax. The full allowance applies to most people; it reduces for those whose adjusted net income exceeds ยฃ100,000 and is withdrawn entirely once income reaches ยฃ125,140.
Individuals can further reduce taxable income by claiming:
Employees who are required to travel away from their normal workplace for business purposes may be granted a daily allowance to cover meals and incidental costs. The allowance can be paid at HMRC scale rates without the need to account for every receipt, provided the employee is on an authorised overnight or extended business trip.
HMRC benchmark rates for UK travel permit tax-free scale payments of:
Actual costs above these rates may be reimbursed tax-free if supported by receipts and are wholly, exclusively and necessarily incurred.
An individual is treated as a UK resident for a tax year if they meet any of the statutory residence test criteria. Residency is determined by days spent in the UK and by connections (โtiesโ) to the UK.
Meeting any of the automatic resident conditions or passing the sufficient ties test means the individual is UK tax resident for the year.
VAT in the UK is governed primarily by the Value Added Tax Act 1994, supported by detailed secondary legislation that sets out procedures, thresholds and special rules.
A taxable person is any individual or entity that independently carries on an economic activity and makes taxable supplies, and who is either registered for VAT or legally required to register.
A taxable event is the point at which a supply gives rise to a VAT liability. The main events are the making of a supply of goods or services, intra-UK acquisitions and imports into the UK.
The taxable amount is the value on which VAT is calculated. It is generally the total consideration received (or receivable) for the supply, excluding VAT, subject to certain adjustments.
The standard VAT accounting period in the UK is three months. Most businesses are placed on quarterly periods, each covering a consecutive three-month span. You can agree with HMRC to file and pay monthly or annually instead but quarterly remains the default.
Since 1 January 2021 the UK has left the EU VAT regime. UK businesses no longer file EC Sales Lists. Instead, cross-border sales to EU consumers are reported under the One-Stop Shop or by local EU filings where required. There is no separate EC Sales List submission for UK VAT-registered traders.
The reverse charge shifts the VAT liability from supplier to customer in specific cases. It applies domestically to:
Under a reverse charge, the recipient accounts for output and input VAT in their own return without a net cash payment.
VAT registration becomes mandatory for any person or business whose taxable supplies exceed ยฃ90,000 in a rolling 12-month period. You must register within 30 days of the end of the month in which the threshold is passed. Voluntary registration is possible below that threshold.
A taxable person must register as an identified person if they make supplies in the UK but have no established business presence here. Typical examples include non-UK businesses making distance sales of goods or certain services to UK customers. Identified persons account for VAT as if they were registered, even if their turnover is below the normal threshold.
VAT group registration is possible for two or more corporate bodies or companies under common UK ownership. To qualify, each member must be UK-established and at least 75 percent owned by the same parent. A group files a single VAT return and makes only one payment, with supplies between members ignored for VAT purposes.
In addition to Corporation Tax, VAT, and Income Tax, there are several other taxes and charges that apply to UK businesses and individuals. These include property transaction taxes, such as Stamp Duty Land Tax in England and Northern Ireland, which ranges from 0 to 15% of the purchase price with payment due within 14 days of completion. Similar taxes exist in Wales (Land Transaction Tax) and Scotland (Land and Buildings Transaction Tax), both with comparable banded rates and deadlines. Business rates for non-domestic properties and council tax for residential properties are also payable through local instalment plans.
Excise and customs duties are levied on goods and imports. Excise duties, reported monthly, cover items like alcohol, tobacco, and hydrocarbon oils, which are taxed at fixed rates per unit or volume. Customs duties are applied at the point of import and vary depending on the type and origin of goods, generally ranging from 0 to over 20%. These are paid either on declaration or through a deferment account.
There are also various transport-related charges. Vehicle Excise Duty, also known as road tax, is based on the vehicleโs type, age, and carbon dioxide emissions. Air Passenger Duty is charged per passenger and depends on the destination, while non-UK hauliers are subject to the HGV Road User Levy.
Additional levies and employer contributions include environmental and regulatory taxes, such as the Climate Change Levy on business energy usage (charged per kilowatt hour), Landfill Tax (charged per tonne at standard or lower rates), and Insurance Premium Tax (12% standard rate, with some exemptions). Employment-related levies include the Apprenticeship Levy, which is 0.5% of a pay bill over ยฃ3 million and reported monthly through PAYE, and Employerโs National Insurance Contributions, currently set at 13.8% for earnings above the secondary threshold and paid alongside PAYE.
Labour law in the United Kingdom is a dynamic framework that governs the rights, responsibilities and protections of both employers and employees. At its core, UK labour law sets out the possibilities for employment relationships, including fixed-term contracts for temporary or project-based work and indefinite (permanent) employment arrangements. These legal structures ensure that employees, regardless of contract type, are entitled to fundamental rights such as the National Minimum Wage, statutory holiday entitlement and protection from discrimination. Employers must also comply with minimum standards for employment contracts, including clear terms on pay, working hours and notice periods, which together create a robust foundation for fair and transparent workplace practices.
This eBook explores the key aspects of UK labour law, offering insights for both employers and employees navigating the modern world of work.
Employment relationship in the UK may be concluded for:
Fixed term employment
Indefinite period of time
In the UK, fixed-term employment refers to a type of employment contract where the employee is hired for a specific period of time, as opposed to an indefinite period. These contracts specify a start date and an end date, after which the employment automatically terminates unless renewed or extended. Fixed-term contracts are commonly used for temporary or project-based work where the employer has a specific need for a certain duration.
Key facts about fixed term employment in the UK:
Contract length: The length of a fixed-term contract can vary widely depending on the needs of the employer and the nature of the work. Contracts can range from a few weeks to several years.
Renewal: Fixed-term contracts can sometimes be renewed or extended by mutual agreement between the employer and the employee. However, there may be limitations on the number of times a contract can be renewed, and there may be legal implications if a fixed-term employee is continuously renewed without a valid reason.
Rights and benefits: Fixed-term employees are entitled to many of the same rights and benefits as permanent employees, including the right to receive the National Minimum Wage, holiday pay, and protection from discrimination. However, there may be differences in benefits such as pension contributions or sick pay, depending on the terms of the contract and the employer’s policies.
Termination: Employment on a fixed-term contract automatically ends on the agreed end date, unless terminated earlier by either party in accordance with the terms of the contract. Employers may also terminate a fixed-term contract early for reasons such as redundancy or poor performance, but they must follow fair and lawful procedures.
Redundancy: Fixed-term employees have the same rights as permanent employees in the event of redundancy, including the right to receive redundancy pay if they have been continuously employed for two or more years.
Notice periods: Fixed-term contracts may include provisions for notice periods that apply if either party wishes to terminate the contract early. The length of the notice period is typically specified in the contract or determined by law.
It’s essential for both employers and employees to understand the terms of a fixed-term contract before entering into it, including the reasons for its use, the rights and benefits it provides and the procedures for renewal or termination. If there are any uncertainties or disputes, it’s advisable to seek legal advice.
Permanent employment, also known as indefinite employment, is the most common type of employment arrangement in the UK.
Key facts about permanent employment in the UK:
Indefinite duration: Permanent employment is characterised by an open-ended employment relationship between the employer and the employee. Unlike fixed-term contracts, there is no specified end date for permanent employment.
Rights and benefits: Permanent employees are entitled to a wide range of rights and benefits under UK employment law, including:
Pension and other benefits: Permanent employees may be eligible to participate in workplace pension schemes offered by their employer, which can provide valuable retirement benefits. They may also be entitled to other benefits such as health insurance, life insurance, and bonuses, depending on the employer’s policies.
Notice periods: Permanent employment typically involves a notice period that must be given by either the employer or the employee if they wish to terminate the employment relationship. The length of the notice period is usually specified in the employment contract or determined by law.
Career development: Permanent employment often provides opportunities for career development and progression within the organization. Employees may have access to training and development programs, promotion opportunities, and other resources to support their professional growth.
Job security: Permanent employees typically enjoy greater job security compared to those on fixed-term contracts. While they can still be dismissed for valid reasons, such as misconduct or redundancy, they have legal protections against unfair dismissal and may be entitled to redundancy pay if they are made redundant.
Overall, permanent employment offers stability, rights, and benefits that provide a strong foundation for employees’ long-term financial security and career advancement.
To ensure an employment contract is valid in the UK, several minimum standards must be met. Firstly, there must be a clear offer of employment from the employer, which is then formally accepted by the employee. This mutual agreement forms the foundation of the contractual relationship.
Employers are legally required to provide a written statement of employment particulars to employees within two months of their start date. This written statement must cover key terms and conditions, including:
Names of the employer and employee
Job title and description
Working hours and days of work
Start date of employment
Pay and pay frequency
Holiday entitlement
Notice periods for termination
Details of any collective agreements that affect the terms of employment
Information on pensions and pension schemes (if applicable)
Additionally, employers must ensure that employees are paid at least the National Minimum Wage or the National Living Wage, depending on their age and specific circumstances. Compliance with working time regulations is also essential; these regulations set out maximum weekly working hours, required rest breaks, and minimum annual leave entitlements.
Beyond these basics, employees are entitled to a range of statutory rights that must be respected and clearly outlined in the employment contract. These include protection from unfair dismissal, entitlement to statutory sick pay, and rights to maternity or paternity leave, amongst others. By meeting these minimum requirements, both employers and employees can be confident that their contract is legally robust and fair.
There should be a clear offer of employment from the employer and acceptance by the employee. The agreement must involve consideration, which typically means the employee provides their services in exchange for pay and benefits. Both parties must intend for the contract to have legal effect, and the terms need to be clear and specific so that rights and obligations are understood.
Many employment contracts in the UK include a probationary period, during which the employer and the employee can assess whether the role is a good fit. This period allows both parties to evaluate each other’s performance and suitability for the position. The duration of the probationary period can vary depending on the employer’s policies and the nature of the role, but it typically ranges from one to six months.
During the probationary period, either the employer or the employee can terminate the employment contract with a shorter notice period than would be required after the probationary period ends. This allows for a more flexible arrangement in case the employment relationship doesn’t work out as expected.
The duration of the probationary period may indeed vary depending on the type of job position. For example:
Junior or entry-level positions: Employers may opt for shorter probationary periods, such as one to three months, as these roles may have less complexity and require less time to assess suitability.
Senior or specialised positions: Employers may choose longer probationary periods, such as three to six months, for roles that involve greater responsibility or require specific skills or experience. This extended period allows for a more comprehensive evaluation of the employee’s performance.
Contract or temporary positions: Probationary periods for contract or temporary positions may be shorter than for permanent roles, as the duration of employment is already predetermined
It’s essential for both employers and employees to clearly understand the terms and expectations associated with the probationary period, including any performance criteria or objectives that need to be met. Additionally, any notice periods for termination during the probationary period should be clearly outlined in the employment contract or company policies
Employment relationships in the UK may be terminated in several ways, each with specific considerations and legal implications. Common methods include termination by notice, mutual consent, for cause, redundancy, incapacity, and by operation of law. In all cases, it is vital for both employers and employees to understand their rights and obligations, and to follow appropriate procedures.
Termination by notice occurs when either the employer or employee provides advance notice as required by the employment contract or statutory law. Employees may resign by giving the required notice, while employers may dismiss staff, also by providing the agreed or statutory notice period. In certain circumstances, a payment in lieu of notice (PILON) may be made, allowing for immediate contract termination if permitted by the contract or agreed by both parties.
Termination by mutual consent is usually formalised through a settlement agreement, which sets out the terms of the termination, including the end date, compensation, and any confidentiality clauses. The notice period in such cases is agreed between both parties; if agreement cannot be reached, statutory notice periods may apply.
Termination for cause, such as gross misconduct or poor performance, may allow an employer to dismiss an employee with reduced or no notice, provided fair procedures are followed, including proper investigation and allowing the employee an opportunity to respond. For poor performance, employers must show they have offered support and opportunities for improvement.
Redundancy occurs when a role is no longer needed due to organisational changes. Employers must follow specific consultation procedures, consider suitable alternatives for affected employees, and provide statutory notice and redundancy pay based on the employeeโs length of service, age, and weekly pay.
Employment may also be terminated due to incapacity if an employee cannot perform their duties because of long-term illness or injury and reasonable adjustments are not possible. Employers must act fairly, considering medical evidence and service length, and provide the appropriate notice as set out in the contract or by law.
Finally, fixed-term contracts automatically end when the term expires, unless renewed or extended, and generally do not require notice unless stated otherwise in the contract.
The notice period in each case is usually stated in the employment contract. If not, statutory minimums under the Employment Rights Act 1996 apply: one weekโs notice if employed continuously for one month to two years, and one additional week for each year of continuous employment up to a maximum of 12 weeks for those with two or more yearsโ service. For redundancy and incapacity, statutory notice periods also apply.
Both employers and employees should review their contracts and relevant laws to ensure compliance and consider seeking legal advice to minimise disputes or legal challenges.
Employers in United Kingdom are required to pay the following taxes and contributions on the gross salaries of their employees:
| Contribution | Employee | Employer |
| Personal income tax | 20% 40% 45% | 0% |
| Pension contribution | 5% | 3% |
| Social security contribution | 8% | 15% |
In the UK, the standard working time is typically defined as 40 hours per week for full-time employees. This means that full-time employees are generally expected to work around 8 hours per day, Monday to Friday, although actual working hours may vary depending on the employer’s policies and the nature of the job.
However, it’s essential to note that many employees may work different schedules based on factors such as industry norms, shift work, flexible working arrangements, or irregular working hours. Here’s how working time can differ with irregular working schedules:
Shift work: In industries such as healthcare, manufacturing, transportation, and hospitality, employees may work shift patterns that involve working outside of regular daytime hours. Shift work often involves rotating shifts, including mornings, evenings, nights, weekends, or even 12-hour shifts. Employers must ensure compliance with working time regulations, including providing adequate rest breaks and managing shift patterns to prevent excessive fatigue.
Flexible working arrangements: Some employees may have flexible working arrangements that allow them to vary their start and finish times or work remotely from home. Flexible working arrangements can help employees achieve a better work-life balance and accommodate personal commitments, such as childcare or caregiving responsibilities. Employers and employees should agree on the terms of flexible working arrangements, including any changes to working hours or location, in writing.
Part-time work: Part-time employees work fewer hours than full-time employees, typically working less than 40 hours per week. Part-time work can be a preferred option for individuals who require flexibility due to personal commitments or other reasons. Part-time employees are entitled to the same employment rights and protections as full-time employees on a pro-rata basis, including pay, holiday entitlement, and statutory benefits.
Zero-hour contracts: Zero-hour contracts are employment contracts where the employer is not obliged to provide a minimum number of hours of work, and the employee is not obliged to accept any work offered. Employees on zero-hour contracts have flexibility in their working hours but may not have guaranteed income or job security. Employers must ensure compliance with working time regulations, including providing adequate rest breaks and not exceeding maximum working hours.
Seasonal or temporary work: Some industries, such as agriculture, tourism, and retail, may have seasonal or temporary work patterns that involve irregular hours or peak periods of activity. Employers should ensure that working time arrangements comply with relevant laws and regulations, including managing workload and providing appropriate rest periods.
Overtime is permitted in the UK, but it is regulated to protect employees from excessive working hours and to ensure fair treatment. The Working Time Regulations 1998 set out the main rules regarding working time and overtime. Most employees cannot work more than an average of 48 hours per week, including overtime, unless they voluntarily opt out by signing an agreement. However, employers cannot force staff to opt out of this limit.
While there is no legal requirement for employers to pay extra for overtime, many offer increased hourly rates, time off in lieu, or other benefits for additional hours worked. The specific terms for overtime pay should be clearly outlined in employment contracts or company policies.
Employers have a duty to safeguard employeesโ health and safety, which includes managing overtime to prevent risks such as fatigue or stress. Rest breaks are mandatory: employees must receive at least a 20-minute break if their working day exceeds six hours, including during overtime. Young workers under 18 have stricter limitations on working hours and are generally not permitted to work night shifts or excessive overtime.
In some sectors, collective agreements between employers and trade unions may determine overtime arrangements, including pay rates and maximum working hours. Employees should know their rights regarding overtime and discuss any concerns about long hours or pay with their employer or relevant authorities.
Overall, while overtime is allowed, employers must follow all relevant regulations, health and safety requirements, and contractual agreements. Employees are encouraged to stay informed about their rights and to raise any issues if they arise.
Employees in the UK are entitled to paid annual leave. The statutory minimum for those working a five-day week is 5.6 weeks, which amounts to 28 days per year. This entitlement typically includes public or bank holidays, unless stated otherwise in the employment contract.
For part-time employees, annual leave is calculated on a pro-rata basis according to the number of days or hours worked each week.
Unpaid leave is not a general statutory entitlement in the UK; it is only available if specifically provided for in an employment contract or company policy. However, there are several statutory exceptions where employees have a legal right to take unpaid leave. These include parental leave, where eligible employees can take up to 18 weeks of unpaid leave per child until the childโs 18th birthday, with a maximum of 4 weeks per year for each child. Employees are also entitled to reasonable unpaid time off to deal with emergencies involving dependants, such as illness or unexpected childcare issues. Additionally, unpaid leave is permitted for certain public duties, like serving on a jury or acting as a magistrate.
Pension scheme (auto-enrolment mandatory)
Enhanced paid leave (maternity/paternity/adoption)
Private medical and dental insurance
Professional training and development support
Life assurance & income protection
Company car or travel allowances (including cycle-to-work schemes)
Employee assistance and mental health programmes
Employee discounts and cashback offers
Flexible and remote working options
Gym memberships and wellbeing subsidies
All other perks, such as subsidised meals, social events, childcare vouchers, and share schemes, can be broadly categorised as Additional Employee Perks.
In the UK, fixed-term employment refers to roles with a clear start and end date. Employees on fixed-term contracts are entitled to the same rights as permanent staff, including pay, holiday, and pension provisions. If they remain on successive fixed-term contracts for four years, their status is usually converted to permanent.
Part-time work involves employees regularly working fewer hours than full-time staff, generally under 35 hours a week, with rights proportionate to their hours. Zero-hour contracts offer no guaranteed hours, and individuals work only when needed. While they receive basic rights like the minimum wage and annual leave, job security is limited.
Casual and occasional work typically covers short-term or ad hoc roles without a regular work pattern. These workers are entitled to basic rights, such as the minimum wage and holiday pay. Employers generally hire them directly for brief assignments.
Temporary agency work involves workers being employed through an agency but carrying out duties for client companies. After 12 weeks in the same assignment, agency workers must receive equal treatment in pay, holiday, and working conditions as permanent employees. The agency is responsible for payroll, taxes, and employment terms.
Posting of employees, also known as secondment, relates to staff temporarily assigned to the UK by an overseas employer. These employees must receive the UK’s minimum employment standards, including the minimum wage, holiday entitlements, and regulated working hours. Employers are required to notify UK authorities and follow relevant employment regulations.
Additionally, umbrella company work is common in contracting. In this arrangement, workers are employed by an intermediary company, which manages their pay and tax. This structure offers flexibility but can lead to varied rights and tax implications.
Understanding and applying labour law in Slovakia is essential to maintaining a compliant and productive workplace. At Accace, we provide expert labour law consultancy and payroll services in the United Kingdom to help you manage employment relationships, contracts, internal policies, and day-to-day HR administration. With our support, you can confidently handle your employer obligations while staying aligned with local regulations.
Our tax experts have prepared a 2025-2026 tax calendar for the United Kingdom, in order for you to keep an eye on the main statutory filing obligations and related deadlines.
Missing a deadline can lead to penalties, but with Accace, you stay one step ahead. Our local experts offer tailored support for filings, planning and advisory, helping you meet every requirement in line with the Romanian tax calendar. Explore our full range ofย tax advisory and compliance services in the United Kingdom.
January 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
January 22
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
January 31, 2026
PIT and payroll deadlines
Online self-assessment return due, balancing payment, and first payment on account
Additional Important Dates
Deadline for amending 2023–24 self-assessment tax returns
February 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
February 22
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
February 7, 2026
VAT
VAT return and payment (Q4 ending 31 Dec)
March 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
March 22
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
April 5
PIT and payroll deadlines
End of 2024–25 tax year
April 6
PIT and payroll deadlines
Start of 2025–26 tax year
April 19
PIT and payroll deadlines
Final PAYE submission/payment (2024–25)
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
22nd of each month
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
April 5, 2026
PIT and payroll deadlines
End of 2025–26 tax year
May 7
VAT
VAT return and payment (Q1 ending 31 Mar)
May 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
May 22
Construction Industry Scheme (CIS)
Pay CIS electronically
May 31
PIT and payroll deadlines
Issue P60 to employees
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
June 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
June 22
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
July 5
PAYE Settlement Agreement (PSA)
Apply for PSA for 2024–25 tax year
July 6
PIT and payroll deadlines
Submit P11D/P11D(b) forms to HMRC
July 19
PIT and payroll deadlines
Pay Class 1A NIC by cheque
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
July 22
PIT and payroll deadlines
Pay Class 1A NIC electronically
Construction Industry Scheme (CIS)
Pay CIS electronically
July 31
PIT and payroll deadlines
2nd payment on account for self-assessment (2024–25)
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
August 7
VAT
VAT return and payment (Q2 ending 30 Jun)
August 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
August 22
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
September 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
September 22
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
October 5
PIT and payroll deadlines
Deadline to register for self-assessment (2024–25)
October 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
PAYE Settlement Agreement (PSA)
Pay tax and NIC owed under PSA (by cheque)
October 22
Construction Industry Scheme (CIS)
Pay CIS electronically
PAYE Settlement Agreement (PSA)
Pay tax and NIC owed under PSA electronically
October 31
PIT and payroll deadlines
Paper self-assessment return due
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
November 7
VAT
VAT return and payment (Q3 ending 30 Sep)
November 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
November 22
Construction Industry Scheme (CIS)
Pay CIS electronically
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
December 19
Construction Industry Scheme (CIS)
Submit monthly CIS return and payment
December 22
Construction Industry Scheme (CIS)
Pay CIS electronically
December 30
PIT and payroll deadlines
Opt-in for PAYE collection (under £3,000 tax owed)
14 days after end of month
Additional Important Dates
EC Sales List submission (for EU trade)
1 month + 7 days after quarter-end
VAT
VAT return and payment (quarterly submissions)
Quarterly instalments (if profits >ยฃ1.5m)
CIT
Quarterly CT payments (months 7, 10, 13, 16) from start of accounting period
9 month after year-end
CIT
Submit Annual Accounts to Companies House
9 month + 1 day after year-end
CIT
Pay corporation tax
12 months after year-end
CIT
File Corporation Tax Return (CT600)
Businesses are strongly drawn to the United Kingdom as it is one of the worldโs top investment destinations known for its entrepreneur-friendly climate and favourable tax rates. The UK and London as a global business hub, rank among the most appealing corporate locations when considering expansion from the rest of Europe or globally. Having weathered the storm of Brexit, the attractiveness of doing business in the United Kingdom and this thriving market remains. The variety of sectors, such as energy, pharmaceuticals, healthcare, IT or fintech, have been flourishing despite COVID due to the UKโs accommodating approach towards foreign investments.
The oil and gas industry plays a central role in the United Kingdom economy. In addition, banking and insurance industry is considered one of the largest.
The strongest workforce in the United Kingdom is centred in the financial technology (FinTech) industry.
In the United Kingdom, one of the favoured investment incentives, aimed at stimulating investment by increasing income from it or reducing its costs, is provided in the form of tax reliefs. This is especially important when you consider doing business in the United Kingdom and wish to explore the incentives of the countries before entering the market.
The most common legal form for doing business in the United Kingdom is a private company limited by shares (or LTD in short).
The incorporation time for such a legal form of business usually takes up 3-5 hours, counted from when the necessary documentation is signed.
The fees related to establishing an LTD form of business are from GBP 50, if submitted online on Companies House or slightly more if you do it through a service provider.
For setting up a private company limited by shares, at least one shareholder is required. The LTD company is also required to have at least 1 director, who can be the same as the shareholder.
The official company register of United Kingdom is open to public and can be accessible at www.companieshouse.gov.uk.
The corporation tax in the United Kingdom ranges from 19% to 25% for companies with profits over GBP 250,000 as well as the introduction of a small profits rate of 19% with effect from 1 April 2023. Marginal relief ย is applied gradually between GBP 50, 000 and ย GBP 250,000 profit bands.
The tax period in the United Kingdom is the accounting period.
The deadline for your tax return is 12 months after the end of the accounting period.
When doing business in the United Kingdom, a company is considered the UK tax resident if it is either incorporated in the UK or, despite being non-UK incorporated, the business of the company is centrally managed and controlled in the UK.
Companies doing business in the United Kingdom and with a taxable turnover of over GBP 90,000 must register for VAT. Registering time for the UK VAT can vary but can generally takes around four to six weeks.
There is no longer any non-resident VAT registration threshold, therefore foreign companies must register for UK VAT immediately, if they are providing taxable supplies.
There are rules to consider on some situations where a registration is permitted. Some common scenarios below would result in a requirement for a UK VAT registration:
There are three different levels of government where taxes may be paid to when doing business in the United Kingdom: the central government (HMRC), devolved governments (notably, Scotland), and local governments in the form of council taxes.
HMRC administers the following central taxes:
In the United Kingdom, the following individuals are entitled to work:
The next types of employment contracts are available for companies doing business in the United Kingdom:
Contract types and employersโ responsibilities can be accessible at https://www.gov.uk/contract-types-and-employer-responsibilities.
Minimum wage is currently ยฃ11.44 per hour for over 21s in 2025.
The personal income tax rates in the United Kingdom:
These above brackets are frozen until 2028, as per the UK budget policy set in 2021.
The tax period for personal income tax runs from 6th April to 5th April each tax year.
In the UK, the due date for the paper tax returns is the midnight of 31st October and for the online tax returns the due date is the midnight of 31st January.
An individual is considered as a tax resident in the UK when the Statutory Residence Test (SRT) is met:
As a taxable income of an individual in the UK is considered:
The rate of the social security contributions paid by the employer in the UK is:paid by the employer in the UK is:
In the UK, private medical insurance is optional and provided at the employerโs discretion. If offered, it is generally considered a taxable benefit for the employee. It is not covered by National Insurance.
In the UK, employees contribute National Insurance at different rates than employers. Employee Class 1 NICs are currently:
(Rates may vary; check HMRC for updates.)
The main forms of legal entities in the United Kingdom are Private Limited Company (LTD) and Companies Limited by Guarantee. There are also 3 other alternatives for legal forms of business (Sole trader, Partnership and Limited Liability Partnership), but each has different tax and liability implications for owners and shareholders.
The following legal forms of legal entities exist in the United Kingdom:
The most common form of business in the United Kingdom is a Private Limited Company by Shares. An LTD cannot be created without at least one shareholder. Additionally, it should also have at least one director, who may be the same as the shareholder.
The initial share capital is usually less that GBP 100, and there is no minimum capital requirementย (other than the requirement that at least one share be issued upon incorporation). Small and medium-sized private companies have the option of submitting modified (i.e., simplified) accounts at Companies House, rather than full accounts.
Companies Limited by Guarantee require at least one guarantor and a ‘guaranteed amount’.
Companies Limited by Guarantee must have at least one guarantor and a defined โguaranteed amountโ.
Guarantors, typically members of the company, control decision-making without taking profits, as earnings are retained for the companyโs use. They commit to paying a predetermined amount (the โguaranteed amountโ) if the company is unable to meet its debts or is dissolved. The guaranteed amount is chosen independently of the company’s total worth.
This payment covers guarantors for situations such as the company being closed down. The guaranteed amount is not linked to how much the company is worth – you choose how much they pay.
In the United Kingdom, there are 3 basic business structure types, and each has different tax and liability implications for owners and shareholders:
If you’re a sole trader, you are an individual that is self-employed and runs your own company. All business profits are yours to keep after taxes have been paid on them. You’re fully responsible for any losses your company makes. You must also stick to certain rules when operating and naming your business.
In a partnership, you and your partner (or partners) each share responsibility for your business.
This includes:
Each partner pays taxes on their share of the business’s income, which is divided between them. However, a partner does not have to be an actual person. An example of a ‘legal person’ that can also be a partner is a limited company.
A Limited Liability Partnership (LLP) can be set up (or incorporated) to manage a business with 2 or more members. A member can be a person or a company, known as a ‘corporate member’. As in an ‘ordinary’ business partnership, each member pays taxes on their share of the profits but is not personally accountable for any debts that the company is unable to pay.
The most common legal form in use for running a business is the Limited Company. Companies are โincorporatedโ to create an organisation with a separate legal personality. This indicates that the organisation is able to run business and enter into contracts under its own name. When registering under the Companies Act 2006, a company must have two constitutional documents:
The Memorandum, which outlines the fact that the original members (subscribers) desire to establish a corporation and consent to become its members. The Memorandum cannot be amended; and
and Articles of Association, also known as the Articles, which serve as a kind of contract between the company and its members. The Articles establish the company’s legally binding rules, including the framework for decisions, ownership and control. According to the Companies Act 2006, a company can draw up its articles to suit the specific needs of the same company, provided it acts within the law.
A Limited Company is owned by its members, those who made investments in the business, and as the name implies, they enjoy limited liability. That means, that the companyโs finances are separate from the personal finances of their owners and typically, creditors of the business may only pursue the companyโs assets to settle a debt. The ownersโ private property is not at risk.
There are two mechanisms for company membership:
Company Limited by Shares – almost all companies fit into this category. Members of such organisation are referred to as shareholders since each one of them owns one or more shares in the company. Shareholders’ limited liability means that they may only lose the money they have already invested or promised to invest (amounts unpaid on shares).
Members of the Company Limited by Guarantee give a guarantee to pay a set amount if the company should go into liquidation.
Online registration for a Limited Company can take as little as 24 hours.
Due to the nature of the UK Limited Company, it should have one director and one shareholder (who can be the same individual) who are both at least 16 years old and liable for all company obligations. Additionally, the company needs to have a UK registered office address. These are the basic requirements that must be met in order for a foreign resident to register a UK company.
Since an offshore company is one that is not incorporated in the United Kingdom, it is not permitted to own a UK company even though it is permitted to operate within the UK and create subsidiaries in the UK. You can separatelyย register a company as a non-British national if you own an offshore company.
| ย | Financial year 2021 to 2022 | Financial year 2022 to 2023 | Financial year 2023 to 2024 | Financial year 2025 to 2026 |
| Main rate | 19% | 19% | 25% | 25% |
| Small profits rate | n/a | n/a | 19% | 19% |
| Lower threshold | n/a | n/a | GBP 50,000 | GBP 50,000 |
| Upper threshold | n/a | n/a | GBP 250,000 | GBP 250,000 |
Corporate income tax is paid on profits from doing such business as:
In the United Kingdom, the tax period is the accounting period. The deadline for tax return filing is 12 months after the end of the accounting period.
The United Kingdom possesses an extensive network of Double Taxation Treaties (DTTs). Typically, unilateral relief is available to credit overseas taxes paid on non-UK source profits against the UK tax on the same profits. While relevant treaties may occasionally extend relief, their primary function for UK companies is to limit overseas Withholding Taxes (WHTs) that would otherwise be payable on passive income.
In the UK, a complex regime allows for ‘underlying’ tax relief concerning foreign dividends, permitting the alleviation of tax suffered at lower levels, especially when dividends flow to the United Kingdom through a chain of companies. However, this relief is applicable only when the dividend in question is subject to tax, limiting its scope as most foreign dividends are tax-exempt.
Various tax incentives are provided through enhanced tax depreciation allowances, known as capital allowances. These incentives may be tied to expenditure or the size of the company incurring the expenditure.
All businesses, regardless of size, can claim a 100% AIA on the first GBP 1 million (previously GBP 200,000 before January 1, 2019) tranche per annum of qualifying capital expenditure. This allowance is now permanent at GBP 1 million, but it is restricted to a single allowance for groups of companies or associated businesses.
Expenditure of a revenue nature on R&D related to a companyโs trade is wholly allowable as a tax deduction. In certain cases, enhanced relief or a credit may be available, offsetting against R&D costs in the companyโs profit and loss account. Expenditure of a capital nature on R&D related to a companyโs trade is also wholly allowable as a tax deduction, with 100% capital allowances available.
Significant changes were implemented for accounting periods commencing on or after April 1, 2023. Companies must now pre-notify their claims, share specific information, and adhere to new criteria, including the inclusion of cloud and data costs as qualifying expenses. Pure math research is now eligible for R&D relief, particularly benefiting those involved in data science or artificial intelligence-based R&D activities.
Further substantial changes are set to take effect for accounting periods commencing on or after April 1, 2024, including the introduction of a new merged scheme, which combines SME and RDEC schemes, and revised rules on subcontracting and overseas costs eligibility. The landscape for claiming R&D relief is evolving, with a focus on supporting businesses engaged in innovative activities.
Certain companies incurring R&D expenditure are entitled to claim R&D tax relief. To qualify as an SME, a company must meet specific criteria, including having fewer than 500 employees, an annual turnover not exceeding EUR 100 million, or an annual balance sheet total not exceeding EUR 86 million. Enhanced R&D tax relief for SMEs involves a 230% deduction for qualifying expenditure.
SMEs with a ‘surrenderable loss’ may claim an R&D tax credit, typically arising from trading losses. The cash payment is a percentage of the surrendered losses, with rates changing over time. From April 1, 2023, higher credit rates will be available for R&D-intensive SMEs, emphasizing the importance of R&D in their overall business activities.
Large companies and SMEs with funded or subsidised R&D expenditure may claim relief under RDEC. The credit, payable at a rate of 20%, is brought ‘above the line’ and reflected in the operating profits of the company, similar to a grant. A merged scheme effective from April 1, 2024, will unify incentives for SMEs and large companies, introducing new rules and rates.
The merged RDEC regime will generate a gross taxable credit of 20%, with changes in the rate at which tax is deducted from the repayable credit for loss-making companies. Overseas costs restrictions and complexities in subcontracting rules are key aspects of the merged scheme.
Companies exploiting patents may benefit from a lower effective rate of corporation tax, with a rate of 10% for the tax year 2023/24. The Nexus scheme links IP income to R&D activities, aligning with revised OECD principles.
Deductions equal to 150% of qualifying expenditure on the remediation of contaminated or derelict land are provided. Special tax reliefs exist for certain expenditures related to UK film production, high-end television, animation, video games, theatres, orchestras, and museum and gallery exhibitions.
Changes have been made to UK creative industry tax reliefs, aligning them with R&D Expenditure Credits. A new Video Games Expenditure Credit (VGEC) and audio-visual expenditure credit (AVEC) replace existing reliefs, with different credit rates for film, high-end TV, video games, animated film, and children’s TV.
These changes aim to enhance support for the creative sector, introducing new credit rates, expenditure credits, and eligibility criteria. Transitional rules are in place for existing productions, ensuring a smooth transition to the new system.
It’s crucial for companies claiming creative tax reliefs to be aware of evolving rules and compliance requirements, including the submission of an online information form alongside tax returns. The United Kingdom does not offer tax holidays or foreign investment incentives, emphasising the importance of the outlined tax relief programs for businesses operating within its jurisdiction.
Hiring expatriates in the UK or sending UK-based employees overseas involves a new set of obligations for employers. To ensure compliance with tax regulations, our UK tax experts have gathered essential information on cross-border employment and expat tax in the United Kingdom. This will provide you with a basic knowledge about tax residency, personal income tax, social security and health insurance contributions or penalties for non-compliance.
Our local tax, payroll and labour law experts are here to help you โ as an expat or an employer โ to obtain essential expert advice, so that you can effectively address all the matters related to cross-border mobility in the United Kingdom and other locations globally.
A person is considered a UK tax resident based on the Statutory Residence Test (SRT). This test evaluates residency status using three key tests:
Automatic Overseas Test (If any condition is met, the person is not a UK tax resident)
Automatic UK Test (If any condition is met, the person is a UK tax resident)
Sufficient Ties Test (If neither of the above tests apply)
This test considers UK ties and days spent in the UK. The more ties a person has, the fewer days they need to become a tax resident.
Ties include:
The tax period runs from 6th April to 5th April each tax year
The rate of social security contributions paid by the employer in the United Kingdom is:
In the United Kingdom, employers have the choice to provide health insurance to their employees. If an employer provides health insurance, the employee will be taxed on the benefit, either through the payroll or via the submission of a P11D at the end of the tax year.
The deadline for submission of the tax return will be on the 31st of January.
If you are required to submit a tax return and fail to meet the deadline for submitting it or paying your bill, you be a subject to a penalty. A late filing penalty of GBP 100 will be charged if your tax return is up to 3 months late and additional charges will apply if it’s later, or if you pay your tax bill late. Additionally, interest is also charged on late payments.
A flexible labour legislation is essential for promoting the creation of new businesses, the growth of established firms and the creation of career opportunities. European countries have distinctive employment law frameworks, yet still remain competitive for investors.
Our infographic on employing in Europe and its labour law sums up and compares working aspects in European countries such as: the Czech Republic, Hungary, Poland, Romania, Slovakia and the United Kingdom.
According to local legislation, there are two types of employment contracts: fixed-term and indefinite. In the case of fixed-term contracts, the law stipulates several conditions and restrictions.
The United Kingdom has no minimum or maximum duration for fixed-term employment contracts****
* A contract concluded after the maximum times of renewal will be automatically a contract for an indefinite period.
** Hungary: The duration of a fixed-term employment relationship may not exceed five years, including the duration of an extended relationship and that of another fixed-term employment relationship concluded within six months of the termination of the previous fixed-term employment relationship. A fixed-term employment relationship may be extended, or another fixed-term employment relationship may be concluded within six months from the time of termination of the previous one upon the employer’s legitimate interests. If the fixed-term employment relationship is extended or another fixed-term employment relationship is established within six months from the time of termination of the previous one and employment is provided in the same or similar position, no probationary period may be stipulated.
*** Poland: 2 years and 9 months pertains to the total duration of subsequent contracts.
**** Romania: A maximum of three successive fixed-term employment contracts may be concluded between the same parties. Successive contracts are those concluded within 3 months of the end of the fixed-term contract and may not last for more than 12 months each. As a result, the legal maximum duration of fixed-term contracts concluded between the same parties can be 60 months. This is theduration of the first 36 months contract, plus 12 months for each of the two successive contracts.
***** Slovakia: The total duration, including any renewals, cannot exceed two years.
****** United Kingdom: Typically, the duration is explicitly stated in the contract and can range from a few months to several years. Employers can renew fixed-term contracts, but after four years of continuous employment on a fixed-term contract, the employee automatically becomes a permanent employee unless the employer can justify not doing so. If the contract is not formally renewed but the employee continues to work past the end date, it may be implied that the contract has been extended on the same terms.
During the trial period, both parties can terminate the employment relationship without restrictions.
* Czech Republic: A probationary period may not be longer than one half of the agreed duration of the employment relationship and must be agreed in writing on the day of work commencement at the latest. During the probation period, the employer may not terminate an employment relationship within the first 14 calendar days of an employee’s temporary incapacity for work (quarantine).
** Hungary: The parties may stipulate in the employment contract a probationary period up to 3 months from the beginning of the employment relationship. If a shorter probationary period is stipulated, the parties may extend the probationary period – only once. The probationary period, even if extended, shall not exceed three months.
*** Poland: In Poland, it is concluded as a special employment contract for the trial period, which is concluded for a period not exceeding 3 months. With the reservation that it is concluded for 1 month – in the case of the intention to conclude an employment contract for a fixed period of fewer than 6 months, and for 2 months – in the case of the intention to conclude an employment contract for a definite period of at least 6 months and less than 12 months. The parties may agree that the contract is extended by the time of leave, as well as by the time of other justified absence of the employee.
**** Romania: Trial/probationary periods for short-term contracts may be agreed upon separately, based on contract length, as defined by law. There are also exceptions: the probation period is established depending on the category of employee, type of employment contract etc. For example, disabled employees have at least 45 working days; fixed-term contracts have a different probation period depending on duration etc.
***** Slovakia: A probationary period must be agreed upon in writing and included in the employment contract. For fixed-term contracts, the probationary period cannot exceed half of the contract’s term.
****** United Kingdom: The duration of the probation period is at the company’s discretion, but usually lasts 3-6 months.
Standard employment contracts*
Czech Republic
Working time: 40h/week
Overtime: 150h/year**
Hungary
Working time: 40h/week
Overtime: 250h/year***
Poland
Overtime: 150h/year****
Romania
Working time: 40h/week
Overtime: 8h/week*****
Slovakia
Working time: 40h/week
Overtime: 150h/year******
United Kingdom
Working time: 35-40 hours/week
Overtime: Uncapped (would be at company discretion)
* The exact conditions under which overtime can be performed, as well as the exact periods (per week, month or year) are specified in detail in all local legislation.
** Czech Republic: Overtime can be increased up to 416 hours/year if agreed with the employee.
*** Hungary: In addition to 250 hours, maximum 150 hours of overtime work can be ordered in a given calendar year subject to agreement between the employee and the employer in writing (voluntary overtime). The employee may withdraw from the agreement at the end of the given calendar year.
**** Poland: Overtime can be increased to 416 hours/year.
***** Romania: The rule is that the legal maximum working time cannot exceed 48 hours/week, including overtime. By exception, however, working time may be extended beyond 48 hours/week, provided that the average working hours, calculated over a reference period of 4 calendar months, do not exceed 48 hours per week. For certain sectors of activity, units or professions laid down in the applicable collective agreement, reference periods longer than 4 months but not exceeding 6 months may be negotiated.
****** Slovakia: Overtime can be increased up to 400 hours/year (employee consent needed).
Entitlement to annual leave or vacation is determined according to the time worked.
(โworkingโ days/year)
Czech Republic: 20 days*
Hungary: 20 days
Poland: 20 – 26 days**
Romania: 20 days
Slovakia: 4 weeks/5 weeks****
United Kingdom: min. 20 days plus 8 bank holidays
(โworkingโ days/year)
Czech Republic: approx.* 5 days (special employment conditions)
Hungary: up to 7 days depending on the number of children; up to 10 days depending on age
Poland: up to 9 days (5 days of care leave, 2 days of child care, 2 days off work due to force majeure)
Romania: minimum*** 3 days
Slovakia: Unpaid/paid leave by mutual agreement****
United Kingdom: at company discretion*****
* Czech Republic: Employees are entitled to 4 weeks of vacation in a calendar year. The law defines the entitlement to additional leave for certain demanding professions (in the length of the specified weekly working hours).
** Poland: 20 days – if an employee has been employed for less than 10 years, or 26 days if an employee has been employed for at least 10 years; 5 days/year/care for a family member for medical reasons, 2 days/year/care for a child, 2 days/year/force majeure
*** Romania: The law defines the entitlement to additional leave for certain categories of employees (e.g. employees working in difficult/dangerous/harmful conditions, blind employees, disabled employees, young people under the age of 18).
**** Slovakia: The minimum annual leave entitlement is 4 weeks. Employees aged 33 or over by the end of the year and those providing permanent childcare are entitled to 5 weeks of annual leave. If you start or stop providing permanent childcare during the year, you are entitled to a portion of the additional week based on the length of time you provided childcare.
***** United Kingdom: If entitled Statutory Maternity Pay (SMP) is paid for up to 39 weeks by the UK government, along with Statutory Sick Pay (SSP) for up to 28 weeks.
Termination without giving a reason by the employee is defined by local regulations. However, the length of the notice period depends on the circumstances of the termination of the contract.
* Czech Republic: The standard notice period is 2 months.
** Hungary: Standard 30 days. Where employment is terminated by the employer, the thirty-day notice period shall be extended by 5-60 days, based on the total previous employment period.
*** Poland: Agreements concluded for definite and indefinite periods: 2 weeks for termination after less than 6 months of activity, 1 month after at least 6 months, 3 months after 3 years; Probation period is not included in the calculation of notice period.
– Probation period: 3 working days if the probation period does not exceed 2 weeks; 1 week if the probation period is longer than 2 weeks; 2 weeks if the probation period is 3 months.
**** Romania: In case of resignation, the notice period is maximum 20 working days for employees in executive positions and maximum 45 days for employees in management positions. In case of dismissal, the employee is entitled to minimum 20 working days’ notice, regardless of whether the post is an executive or management post.
***** Slovakia: 1 month for termination after < 1 year of employment, 2 months for others; in case of termination due to dissolution or relocation of the employer, redundancy or health condition of the employee the NP is 2 months for employees with 1 – 5 years, 3 months for > 5 years of employment.
****** United Kingdom: At company discretion – normally 1-3 months depending on how long an employee has been in employment
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
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