According to estimates, around 32 million people in the UK pay taxes. However, the amount that is due upon individuals and businesses will vary depending on their income (or profits) as well as spending patterns (in the case of indirect taxes such as VAT). Focussing on the significance and use of tax identification parameters, this article entails a discussion on the use of taxpayers’ identification numbers in the UK, some of the key taxes levied on individuals and eligibility criteria for certain direct taxes.

What Is A TIN Number used for in the UK?

A TIN Number is primarily a Tax Identification Number used to track and monitor the tax accounts of individuals. Although the term TIN Number is not specifically used in the UK in its strictest sense, the HMRC issues two TIN-like numbers to members of the public. The purpose and use of these are described below:

  • The Unique Tax Payer Reference (UTR): This is a ten-digit set of numbers issued by the HMRC to individuals and businesses who qualify for paying tax returns in the UK. You will find this number on the front page of the tax return (form SA100 or CT600). In addition to this, you will find it on a “Notice to complete Tax Return” (form SA316 or CT603) or a Statement of Account. It is also printed next to the headings of “Tax Reference”, “UTR” or “Official Use”; but the appearance and terms that are used will depend on the type of document issued. 
  • The National Insurance Number (NINO): This includes two letters which are followed by six numbers and then only one of the letters between A, B, C and D. Individuals residing in the UK will be issued a NINO once they are 16 years of age. They will be informed by the Department for Work and Pensions (DWP) or the HMRC. If you are an employee, you will find this number on your payslip as well as on a Statement of Account issued by HMRC. It links individuals to their records of national insurance contributions, tax payments, student loans as well as social security benefits.

Both of these numbers are not officially issued through a card or a document but are used during relevant correspondence from the HMRC, they remain permanent for life and their format will not be altered. They should be considered personal and private by individuals and should not be disclosed in general. 

Individuals who are under the age of 16 or do not have a right to work in the UK will not be issued a UTR or a NINO. However, individuals seeking employment or those who are eligible to claim state benefits will need these numbers for official documentation.

What Do UK Companies Use Instead Of TIN Numbers?

Since TIN Numbers are not used in the UK while conducting business with international markets UK companies provide alternates to the TIN Number. These include the Unique Taxpayer Reference (UTR) and Company registration number (CRN). Both numbers are separate and are used for different purposes by UK companies. They are extremely important for businesses and will need to be provided during regular company administration. 

The UTR is issued to registered companies by HMRC once a limited company has been registered for Corporation Tax. In addition to HMRC documents, the UTS can also be found by logging into the online Corporation Tax account of businesses.

The Company Registration Number (CRN) is a unique combination of 8 characters, which consists of either 8 numbers or depicts 2 letters that are followed by 6 numbers. It is displayed on the Certificate of Incorporation of businesses. Among the many uses of a CRN include registering with HMRC, opening a company bank account as well communication or trading with third parties.

How Much Tax Do I Have To Pay In The UK?

According to a general estimate, an individual pays one-third of their income in the form of taxes in the UK. While the amount of tax one pays depends on the scale of their income, some people will pay a higher tax perhaps due to the property that they own or inheritance that they may receive.

There are different types of taxes under the UK taxation system. Direct taxes include PAYE (Pay As You Earn) and National Insurance. These account for 20 per cent of an individual’s income. On the other hand, indirect taxes include VAT, council tax as well as duties on alcohol and petrol. 

Therefore, basic taxes in the UK include the following:

  • Income Taxes 
  • Property Taxes 
  • Capital Gains 
  • UK Inheritance Taxes 
  • Value Added Tax 

These are all progressive taxes; which means that the scale of taxes increases with an increase in income.

How Much Income Tax Do I Have To Pay In The UK?

Direct taxes are automatically deducted from your wages, income or pension before you receive them. This is termed as Pay As You Earn. Anyone earning equal to or less than £12,750 is not eligible for PAYE as the amount is considered under the law as an individual’s personal allowance. 

Incomes above the minimum cap are taxed at an incremental rate of 20 per cent to 45 per cent depending on whether an individual belongs to the basic, higher or additional tax rate band. Below are details of these bands:

  • 0 per cent income tax when income is up to £12,570
  • 20 per cent income tax when income is between £12,571 and £50,270 
  • 40 per cent income tax when income is between £50,271 and £150,000 
  • 45 per cent income tax when income is above £150,001

If you are self-employed, you are required to file a self-employed tax return in order to pay your taxes through a self-assessment. 

Which Incomes Are Tax-Free In The UK?

Incomes derived from any of the following sources are considered to be tax-free in the UK:

  • Transport costs of an employee’s (and their immediate family) relocation for work in the UK
  • Winnings from games, pool betting, lotteries or competitions with prizes
  • Long service employee awards (certain limitations apply)
  • Individual savings account amounting to £20,000
  • Incomes such as interest or dividends arising from savings accounts 
  • Pensions paid to war widows and dependents
  • Social security and state benefits include maternity allowance, employment and support allowance, attendance allowance, child tax credit and housing benefit. 

Who Collects Tax Revenues In The UK?

The HMRC collects and administers tax collection in the UK. HMRC administers the following central taxes while local governments collect council tax:

  • Income tax
  • Corporation tax
  • Capital gains tax
  • Inheritance tax
  • Insurance premium tax
  • Stamp, land, and petroleum revenue taxes
  • Environmental taxes
  • Climate change and aggregates levy and landfill tax
  • Value-Added Tax
  • Customs duty
  • Excise duties

Who Is Tax Exempt In The UK?

Individuals may apply for tax exemption if they face  the following conditions:

  • If someone is a tax resident for at least one year out of the previous three years 
  • They have spent less than 16 days in the UK during the previous tax year
  • They are not a UK resident

The same applies in case:

  • Someone is not a tax resident for the previous three years
  • They have spent less than 46 days in the UK

Conclusion:

You may not find the term TIN Numbers used in the UK as there are country-specific terms for individuals as well as businesses that identify their unique taxpayer identification. HMRC issues two TIN-like numbers for individuals; one is the Unique Tax Payer Reference (UTR)and the other is is National Insurance Number (NINO). These may be used for payment of taxes which include Income Taxes, Property Taxes, Capital Gains, UK Inheritance Taxes or Value Added Tax. In the case of businesses, the Unique Taxpayer Reference (UTR) and Company registration number (CRN) are issued by the HMRC. These unique numbers will be required for most corporate dealing including (but not limited to) registering with HMRC, opening a company bank account as well communication or trading with third parties.

FAQs: What Is A TIN Number used for in the UK?

Does the UK have a TIN number?

Although the term TIN Number is not specifically used in the UK in its strictest sense, the HMRC issues two TIN-like numbers to members of the public. One is the Unique Tax Payer Reference (UTR) which is a ten-digit set of numbers issued by the HMRC to individuals and businesses who qualify for paying tax returns in the UK. While the other is the National Insurance Number (NINO) which includes two letters which are followed by six numbers and then only one of the letters between A, B, C and D. 

How can I find my TIN number?

Since the TIN is replaced by Unique Tax Payer Reference in the UK, you can find this ten-digit set of numbers issued by the HMRC on the front page of the tax return (form SA100 or CT600). In addition to this, you will find it on a “Notice to complete Tax Return” (form SA316 or CT603) or a Statement of Account. It is also printed next to the headings of “Tax Reference”, “UTR” or “Official Use”; but the appearance and terms that are used will depend on the type of document issued.

How do I get a tax number in the UK?

As an individual taxpayer, a UTR will be issued to you automatically when you apply for your tax self-assessment in the UK. The UTR is issued to registered companies by HMRC once a limited company has been registered for Corporation Tax. In addition to HMRC documents, the UTS can also be found by logging into the online Corporation Tax account of businesses.

What is the purpose of the TIN number?

From filing income or corporation tax returns to VAT returns, the unique TIN Number (UTR in case you are in the UK), will serve as the taxpayer’s identification number in maintaining the details of their tax payment history. It may also be used by the HMRC to monitor the tax accounts of individuals.

Who uses a TIN number?

A TIN number s used by individuals and businesses alike. Termed as the UTR in the UK, this unique set of 10 digits serves carries details of income tax returns of individuals as well as corporations. Meanwhile, the Company Registration Number (CRN) which is displayed on the Certificate of Incorporation of businesses is needed for regular corporate administration including trading. 

References:

What is a Tax Identification Number | GoCardless

Jurisdiction’s name: United Kingdom Information on Tax Identification Numbers Section I – TIN Description The United Kingdom

Do UK companies have a TIN number?

What is a Tax Identification Number? | the West Brom

Income tax calculator 2022-23, 2021-22 and 2020-21

UK Tax Calculators

HM Revenue & Customs – GOV.UK

What was missing from this post which could have made it better?