Simple Guide
What Taxes Do You Pay
in the UK?
There are 4 main tax types. Let's explain with simple examples.
💰
Tax #1
Corporation Tax
Did your company make money? You pay a portion of the profit to the government.
19-25%
rate
Varies based on profit
💡 Example:
£40,000 profit
×19%
Tax:
£7,600
🧾
Tax #2
VAT
You add 20% to your invoice price and send it to the government.
20%
standard
Mandatory if turnover £90K+
💡 Example:
£1,000 service
+£200
Client pays:
£1,200
💵
Tax #3
Salary Tax (PAYE)
If you're paying a salary, tax is deducted from that salary.
£12,570
First this much is tax-free! 🎉
💡 Example:
£30,000 salary
-£5,578
Take home:
£24,422
📈
Tax #4
Dividend Tax
Tax paid when withdrawing company profit to yourself.
8.75%
basic rate
First £500 is tax-free
💡 Smart Strategy:
✓
Low salary (£12,570)
✓
Rest as dividend
⚠️
Remember
- 👉 This information is for general guidance only.
- 👉 Always hire an accountant.
- 👉 Tax rates may change annually.
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