**2.1. UK tax revenues by type of tax**

was applied up to an income of £32,000, a higher rate of 40% for incomes between £31,785 and £150,000 and an additional rate band of 45% for income over £150,000. The UK Government estimates there to be about 30.1 million income tax payers in 2016–2017, including

• National Insurance Contributions (NICs). The origins of NICs were as compulsory contribution to a National Insurance fund, which was linked to benefits that could be paid to the contributor. Over the years the link between contributions and payments has gradually disappeared and there is now considerable overlap between NICs and the general budget. Employers and employees are subject to NIC's (at different rates) and the self-employed at a different rate again. The NIC rate for income from employment between £155 and £827

• Corporation tax. This tax is levied on the profits of UK resident corporations and on the UK profits of non-resident corporations. Losses may be offset against future profits for tax

• Value added Tax (VAT). Value added is a tax on the value added at each stage of production. By the stage of final consumption it is, in effect, levied on the value of the good or service. The standard rate of VAT is currently 20%. A small number of goods are taxed at a

• Excise taxes. Excise duties are levied on alcoholic drinks, fuels and tobacco products. These duties are typically levied at a specific rate (for example, per litre) but there is also an ad va-

• Capital gains tax. This tax is applied to the gains accruing from the buying and selling of financial and other assets. Like income tax there is a tax free threshold (£11,100 for individuals in 2016–2017). The rate of capital gains tax varies according to the individual's

• Council tax. The revenues from council tax go to local rather than national government. Council tax is levied on an assessed value of domestic residences, with the rate of tax de-

• Business rates. These are another tax which generates local rather than national government revenues. They are levied on the assessed rentable value of business and commercial

• Inheritance tax. Inheritance tax applies to transfers of assets in excess of £325,000 after or immediately before death. The standard rate is 40% of the value exceeding £325,000. Some

• Other taxes. These include stamp duty levied on transactions involving assets such as land, property and financial securities. Taxation of North Sea oil and gas is, essentially, a variant of corporation tax. A bank levy is applied to the liabilities and equity of banks. A number of indirect taxes also exist. These include an excise tax on motor vehicles, air passenger duty, a climate change levy, an insurance premium tax, a landfill tax and duties on gambling

purposes. The rate of corporation for the 2017–2018 tax year is scheduled at 19%.

reduced rate and a range of products are exempt from VAT in the UK.

pending on within which band the assessed value of the property falls.

some 609,000 basic rate (only) payers and about 4.4 million in the highest band.

per week was 12% in 2016–2017.

84 Taxes and Taxation Trends

lorem component.

income tax band.

properties.

reduced rates and exemptions apply.

**Figure 1A** shows the composition of UK tax revenues for the tax year 2008–2009 and **Figure 1B** the composition in 2015–2016.

In terms of trends the composition of UK tax revenues by type of tax has been stable between 2008 and 2009 and 2015–2016. In 2008–2009 income tax accounted for 34% of total tax revenues and in 2015–2016, in both periods representing the largest revenues for any of the taxes. The next largest contributor to overall tax revenues in 2015–2016 was VAT, comprising 22% of revenues (against 18% in 2008–2009). The contribution of NICs declined slightly in relative importance from 22% of revenues in 2008–2009 to 21% in 2015–2016. Very roughly about three quarters of UK tax revenues in both 2008–2009 and 2015–2016 was made up from three taxes—income tax, NICs and VAT. Corporation tax, the next biggest contributor, declined slightly in relative importance from 2008–2009 to 2015–2016.

total of about £20 billion in the 2015–2016 tax year. Of the smaller taxes Stamp Duty Land Tax has shown a substantial increase in revenues between 1999 and 2016, as has capital gains tax and air passenger duty. Revenues from some taxes such as that on petroleum revenue have tended to exhibit volatility between 1 year and another but revenues from most taxes show a

UK Taxes and Tax Revenues: Composition and Trends http://dx.doi.org/10.5772/intechopen.74380 87

In terms of tax revenues from the different types of tax levied the composition of UK tax revenues is remarkably stable. The most important contributions to UK tax revenues have remained the same for a number of years and their shares in overall revenues have changed little. Arguably the only noteworthy change between 2008 and 2009 and 2015–2016 is an increase in the relative importance of VAT receipts at the expense (mainly) of income tax and NICs.

**Figure 2** presents the composition of UK tax revenues by component country for three

The results show a stable pattern of UK tax receipts by country. In all three time periods Northern Ireland accounts for about 2% of total tax revenues, Wales for 3–4% and Scotland

pattern of steady evolution over time.

**2.2. Tax revenues by country within the UK**

different time periods—2000–2001, 2007–2008 and 2015–2016.

**Figure 2.** UK tax receipts by country (a) 2000–2001, (b) 2007–2008, and (c) 2015–2016.

**Table 1** provides details of the revenues of individual taxes and their evolution over time. As has already been seen three taxes jointly provide about 75% of total UK tax revenues—income tax, NICs and VAT. Fuel duties have consistently yielded significant revenues (£27.6 billion in 2015–2016). A range of excise duties on tobacco and alcoholic drinks yielded a combined


**Table 1.** Decomposition of UK tax revenues (£ million).

total of about £20 billion in the 2015–2016 tax year. Of the smaller taxes Stamp Duty Land Tax has shown a substantial increase in revenues between 1999 and 2016, as has capital gains tax and air passenger duty. Revenues from some taxes such as that on petroleum revenue have tended to exhibit volatility between 1 year and another but revenues from most taxes show a pattern of steady evolution over time.

In terms of tax revenues from the different types of tax levied the composition of UK tax revenues is remarkably stable. The most important contributions to UK tax revenues have remained the same for a number of years and their shares in overall revenues have changed little. Arguably the only noteworthy change between 2008 and 2009 and 2015–2016 is an increase in the relative importance of VAT receipts at the expense (mainly) of income tax and NICs.
