UK slashed its income tax rate this year from 50pc to about 45pc marking the largest tax reduction in the world this year (2013). As a result, the UK which had the 5th highest tax rate in Europe dropped to 11th in the Europe. However UK’s tax rate is still the 18th highest in the world and this says a lot about the tax burden that UK residents have to cope with. The government has numerous deficits in its budget and this was contrary to what was expected since global income tax rates have increased by 0.3% for the second year running.
However, business professionals see this as a way of making Britain more attractive to international investments. The recent corporate tax rate cuts and tax reforms can be seen as a way to encourage more investors to come into the country. The US however increased its tax rates after the Bush-administration tax cuts came to and end. This saw tax rates increase from 35% to 36.9%. That is still considerably lower that what income tax payers in the UK are subjected to. In comparison, Slovenia had the highest tax rate increase from 41% to 50%, which is a very high figure.
In general, there seems to be a trend that is aimed at imposing higher tax rates to high income earners and taxing low income earners at a lower income tax rate. The debates explaining current tax rates are endless with every financial analyst having their own opinion on the matter. But you can’t listen to everyone’s opinion and that is why we have provided this simple infographic that gives the perfect overview on the UK income tax system. Income tax is also subject to tax reliefs and this infographic has also included a good analysis on tax cuts that are available to income.