UK Tax System

The main UK taxes are Income Tax, National Insurance (NI), Value Added Tax (VAT), Capital Gains Tax (CGT), Inheritance Tax (IHT), and Council Tax (local). Two big differences from Korea are that the tax year starts on 6 April, and NI is a separate social-insurance levy distinct from income tax.

Income Tax

• Personal Allowance: income below this threshold is tax-free. For high earners (income above GBP 100,000), the allowance tapers down.
• Bands: in England, Wales, and Northern Ireland, three bands — basic (20%), higher (40%), additional (45%). Scotland uses its own 5–6 band scale with different rates.
• Savings and dividends: lower rates or annual allowances apply up to certain thresholds (limits change each year).

National Insurance (NI)

• Class 1: employee + employer contributions. Rates apply between specific earnings limits.
• Class 2 / Class 4: for the self-employed. Class 2 is flat (or auto-credit), Class 4 is profit-based.
• NI contributions feed eligibility for State Pension, contribution-based JSA, contribution-based ESA, and Maternity Allowance.

PAYE vs. Self Assessment

• PAYE (Pay As You Earn): employees have income tax and NI deducted automatically each month. Usually no separate return is needed.
• Self Assessment: the self-employed, those with rental income, high earners (e.g., GBP 100k+), or with foreign income must file online by 31 January each year. Paper deadline is 31 October.
• Identifiers: beyond an NI number (NINo), Self Assessment requires a UTR (Unique Taxpayer Reference).

Resident vs. non-resident — the Statutory Residence Test (SRT)

The UK uses the Statutory Residence Test to decide tax residency. It's not a single "183-day rule":

• Automatic overseas test (auto non-resident): under 16–46 days in the UK, depending on past residency.
• Automatic UK test (auto resident): 183+ days, only home in the UK, full-time work in the UK, etc.
• Sufficient ties test: if neither auto test applies, count UK ties (family, accommodation, work, 90-day rule, country tie) against days in the UK.

For complex cases, accountant advice is essentially required.

Things to watch as a Korean resident

• UK–Korea tax treaty: prevents double taxation by allocating taxing rights and recognising foreign tax credits. But residence determination comes first — once SRT makes you a UK resident, your worldwide income is, in principle, UK-taxable.
• Korean rental income, savings interest, and pension income can all become UK-reportable; tax already paid in Korea typically offsets via Foreign Tax Credit.
• The non-domiciled regime has been overhauled in 2024–2025 — don't rely on older guides; check the current rules.
• VAT: for ordinary consumers, the most visible tax is the standard 20% VAT included in retail prices.
• Council Tax: local tax based on property band, paid monthly. Discounts apply for student-only and single-occupant households.

This is general guidance as of 2026; rates, allowances, and thresholds are reset each April. For individual circumstances, work with a qualified tax adviser.

Official guidance: GOV.UK Income Tax, HMRC Self Assessment