From the Inland Revenue website: “If you are a U.S. citizen or resident alien living or traveling outside the United States, you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States. Your income, filing status, and age generally determine whether you must file a return. Generally, you must file a return if your gross income from worldwide sources is at least the amount shown for your filing status in the Filing Requirements table in Chapter 1 of Publication 54. See also US Citizens and Resident Aliens Abroad.
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In the UK there is also the standard income tax. Income Tax is very similar to the USA, taken from your pay. No forms to fill out every year unless you are self employed. The Inland Revenue calculates a flat tax for everyone, except the self-employed and company directors who must file annual returns called Self Assessments. This tax includes Pay As You Earn (PAYEPay As You Earn - UK Income Tax) and National Insurance contributions. The regulations on whether or not you pay taxes if you are not permanently staying in the UK is complicated, their leaflets are available online. In the UK, you can obtain relief from double taxation if your overseas income is subject to tax both in the UK and in another country.
Some families are also entitled to tax credits similar to Earned Income Credit. In the UK these are called Child Tax Credit and Working Tax Credits. These are based on family income, can supplement a large portion of child care costs, payments made directly via direct deposits, with annual returns required.
Income Tax Compared
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Source: OECD, 2005 data
Sales taxes are nearly invisible, they are already calculated into costs of goods, so the price you see is the price you pay at the till or checkout. It is called VAT or Value Added Tax, and is 17.5%. It is applied to all goods/services except children’s clothes and some food products such as milk. For more information check HM Revenue and Customs. (It's interesting to note that the VAT rate was reduced to 15% during the recession in 2009 but was returned to 17.5% in January 2010.)
A reader pointed out that "Actually, all fresh food, vegetables etc, that are not processed or cooked are VAT free as is bread and some other essentials. All books and magazines, newspapers etc are VAT free as well."
Council Tax is the equivalent of property tax. It is paid by tenants/residents and not landlords of rented property.
See more about Tax at Direct.gov.uk
For questions and more information, read our Tax Board.