Personal Taxation

UK residents typically pay tax on all worldwide income. An individual qualifies as a UK resident if he or she spends 183 days or more in the UK in any tax year (6 April to 5 April), or makes regular visits to the UK averaging at least 91 days per tax year over a maximum of four years.

All UK residents are entitled to the "basic personal allowance", which is an amount of income on which an individual does not have to pay any tax. For 2008/09, this amount is £5,435.

Taxable bands above the basic personal allowance 2008/09

£1 to £36,000

Over £36,000

Earnings

20%

40%

Savings

20%

40%

Dividends

10%

32.5%

Source: HM Revenue & Customs 2008

Note: Dividends are treated as the top slice of total income, savings as the next slice, and other income as the lowest slice.

The UK's higher personal tax rate is one of the most competitive in Europe:

Country

Higher personal tax rate (%)

Denmark

59

Sweden

58

Belgium

53.5

Finland

53

Netherlands

52

France

51

Austria

50

Germany

47.5

Italy

45

Spain

42

Portugal

42

Ireland

41

Hungary

40

Poland

40

Greece

40

UK

40

Luxembourg

39

Czech Republic

32

Personal Taxation

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	£1 to £36,000	Over £36,000
Earnings	20%	40%
Savings	20%	40%
Dividends	10%	32.5%

Country	Higher personal tax rate (%)
Denmark	59
Sweden	58
Belgium	53.5
Finland	53
Netherlands	52
France	51
Austria	50
Germany	47.5
Italy	45
Spain	42
Portugal	42
Ireland	41
Hungary	40
Poland	40
Greece	40
UK	40
Luxembourg	39
Czech Republic	32