Tax
PAYE income tax, 20% VAT and the residence/domicile reform
Income tax is collected largely through PAYE on a progressive scale set at Westminster (with Scottish rates devolved). VAT is 20%, and the old non-domicile regime is being replaced by a residence-based system from 2025.
Key rules
- Most employees are taxed at source through PAYE with a personal allowance.
- Scotland sets its own income-tax bands and rates on non-savings income.
- The remittance-basis non-dom regime is abolished and replaced by a residence-based regime from April 2025.
Governing law
- Income Tax Act 2007
- Value Added Tax Act 1994
- Taxation (International and Other Provisions) Act 2010
Penalties and consequences
- Penalties and interest for late filing and payment; criminal liability for evasion
In practice
The 2025 abolition of non-dom status is a major change for internationally mobile residents, who need to reassess prior planning.