The UK has the most complicated tax structure, but have you wondered which tax is the most hated in the UK?
This is what we will attempt to answer in the blog. This blog covers a vast majority of the different taxes imposed by the government on businesses and individuals. You will be provided with details about each tax and the reasons why people hate it. In the end, we will give you a bottom line to pinpoint which tax tops this list. Let’s begin exploring the most hated tax in the UK.
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Most Hated Tax in the UK for Individuals
Firstly, we will discuss the taxes that are imposed on the general public in the first section. These taxes are applied to a vast majority of people and can be hard to calculate. Nevertheless, the government expects each and every individual to pay their due share on time.
1. Inheritance Tax (IHT)
The Inheritance Tax (IHT) is one of the most hated taxes in the UK. It is a tax applied to the estate, which includes property, money, and possessions of someone who has died. The tax is applicable to your estate above the value of £325,000. The IHT applied to the amount above the threshold level is 40 percent.
2. Income Tax
Another tax that is applied widely to all citizens is the Income Tax. This tax comes at three different rates, depending on how much you earn. The government does not expect any tax from you if your income is below £12,570. However, if your income is above this amount, you will be charged the Basic Rate of 20 percent up to £50,270. The Higher Rate of 40 percent is applied if your income lies between £50,271 and £125,140, and the Additional Rate is 45 percent if your income exceeds £125,140.
3. National Insurance Contributions (NIC)
This might be the most hated tax in the UK: the National Insurance Contributions (NIC). The NIC is collected for you to qualify for several state benefits, including the State Pension. This tax is applicable to those who are above the age of 16 and earn £242 per week from one job or make a profit of £12,570 a year.
Most Hated Tax in the UK for Businesses
Next, we will look at the taxes imposed on businesses and corporations. Although small and medium enterprises are the heart of the economy, they are still taxed.
1. Business Rate
Business Rate is a tax imposed on non-domestic properties such as shops, offices, pubs, warehouses, factories, etc. The Business Rate is calculated by the local council. However, if you feel like you are being overcharged, you can also appeal to your council for relief.
2. Capital gains Tax (CGT)
Capital Gains Tax, or CGT, is paid when you sell an asset at a higher value than its purchasing price. The tax is only applied to the gain, meaning the difference between the purchased amount and the selling amount. The rates vary for the assets, as they can be financial as well as tangible, such as property.
3. Value Added Tax (VAT)
This is probably the most hated tax in the UK for small businesses: the Value Added Tax (VAT). VAT is a consumption tax that is applied to most of the goods and services bought and sold in the UK. The standard VAT rate is 20 percent, however, it is reduced for some goods to 5 percent.
4. Corporation Tax
Corporation Tax is usually applied to larger firms that are limited companies, have foreign branches, or have a community group. The tax is applied to the profits the company makes from doing business, making investments, and selling assets.
5. Insurance Premium Tax (IPT)
Insurance Premium Tax, or IPT, is another most hated tax in the UK. The government applied this tax to most general insurance, such as car insurance, home insurance, and travel insurance. The standard IPT rate is 12 percent, whereas the higher rate is 20 percent.
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The Bottom Line
So which is the most hated tax in the UK? According to reports, IHT is probably the most hated tax, as it charges citizens up to 40 percent on inherited property. However, businesses usually do not consider this a big expense as most of their operations do not involve inherited property. Therefore, other notable mentions are VAT for its complexity, CGT, Business Rate and Corporation Tax.
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