August, 2013

Revealed: The 10 countries with the highest tax rates

If you pay the highest income tax rate in the UK – 45 per cent – you might think that you are paying one of the highest income tax rates in the world. However, you may be surprised to learn that the residents of 19 countries actually pay a higher ‘marginal’ rate of tax than you.

So, we’ve put together a guide to the ten countries in the world that levy the highest marginal income tax rate. We also look at those countries with the lowest rates. Keep reading to find out more.

 The top ten countries with the highest marginal tax rates

One of the most commonly used tools for comparing taxation levels across different countries is the ‘marginal’ tax rate. This is simply the rate on the highest income tax bracket. For example, the UK’s marginal tax rate is 45 per cent and is the highest rate at which income tax is levied in this country.


The ten countries that charge the highest marginal income tax rate (2012  figures) are:

1. Aruba – 59%

2. Sweden – 56.6%

3. Denmark – 55.4%

4= Netherlands – 52%

4= Spain – 52%

6= Austria – 50%

6= Belgium – 50%

6= Japan – 50%

6= Senegal – 50%

10. Finland – 49%

In 2012, Aruba had the world’s highest top marginal rate, 59%, followed by Sweden, 56.6%, and Denmark, 55.4%. The UK was 19th on the list at 45%.

Other major countries have marginal tax rates lower than the UK. The marginal tax rate in the USA is 35% while it is 43% in Italy, 40% in South Africa and just 27.5% in Brazil.

At the other end of the spectrum, besides a handful of countries that do not have personal income taxes, Macedonia, Bulgaria, Albania and Bosnia-Herzegovina all showed the lowest top marginal rate. In these countries the highest rate of income tax is just 10% while it is 12% in Belarus, 13% in Russia and 15% in Hong Kong, Serbia and Lithuania.

What is the marginal tax rate where you live? Do you think the UK’s highest rate of tax is fair compared to other countries? And what do you think about the rates in Aruba, Sweden and Denmark? Share your thoughts below.


The Replacements Of P60

You will only be given a P60 if you were working for an employer on the last day of the tax year (April 5th). If you stopped working for an employer before the last day of the tax year, you should be given a P45 instead.

A P60 is a statement given to you by your employer which shows the amount of tax that you have paid during the tax year and the amount of income that you have earned. They may be other information on your P60 include your unique PAYE tax reference number, your tax code and your name and other personal details.

There are a number of reasons why you may need a P60, they include:

  • Claiming a tax rebate
  • Child support
  • Student loan
  • Proof of earnings
  • Tax credits

How to obtain a Replacement for a Lost P60

Often people loose or are not given a P60 and need to get a replacement. It is not actually possible to obtain an actual replacement of a P60, it is possible to obtain a document that can be used as a replacement though, this document is a statement of earnings.

To obtain a statement of earnings you need to write to the payroll department of the company that you would like the replacement P60 from. We can send you a template letter which you can customise, simply send us an Email using this: template.

The company is legally required, under the data protection act, to provide a statement of earnings for any time in the last 6 years. Let us know if you have any questions in the comments below.

Some Ways To Pay Less Tax On Your Savings

Taxes are a fact of life. But, while you may not be able to avoid paying tax on your income, your shopping or your property, you may be able to earn tax-free interest on your savings.

If you’re a basic rate taxpayer, you’re probably paying 20 per cent tax on your savings interest. And, if you are a higher earner you may be losing 40 or 50 per cent of your savings returns to tax. If you want to ensure you’re getting the very best return on your savings it is vital that they are tax-efficient. Our guide gives you three great tips to paying less tax on your savings.

Maximise your ISA contributions

On 6 April 1999, the government introduced the Individual Savings Account (ISA). This type of account lets you save a certain amount of money each year and you’ll pay no tax on your returns.

In the 2012/13 tax year, the individual ISA allowance is £11,280. You can save up to £5,640 as cash and the remainder in stocks and shares. And, crucially, any money that you place in an ISA will earn gross rather than net interest. This ensures you don’t lose 20 per cent (or 40/50 per cent if you are a higher rate taxpayer) of your interest in tax.

From April 2013 the individual ISA limit rises to £5,760.

There are hundreds of ISAs available and, even if you don’t have the maximum to save, they are a great way of sheltering your savings from tax. Always consider using your ISA allowance before you put your savings elsewhere.

Register for gross interest if you’re not a taxpayer

If you’re not a UK taxpayer, you shouldn’t be paying tax on your savings interest. So, if you earn less than the threshold for paying tax – around £155 per week for under 65s – you should receive ‘gross’ rather than ‘net’ interest.

To do this, you need to speak to your bank or building society and complete a R85 form. This will register you for gross interest and ensure no tax is taken off before you receive your interest.

Take advantage of your partner or child’s tax status

If you have a partner than pays a lower rate of tax then you – perhaps they are a non-taxpayer – you could save your money in your partner’s name in order to benefit from paying less tax.

For example, you may be a higher-rate taxpayer and pay 40 per cent of your savings interest in tax. If your partner is a basic-rate taxpayer and only pays 20 per cent, you can save your money in your partner’s name and only pay 20 per cent tax.

Bear in mind that if you do this your savings will be in your partner’s sole name. Make sure you understand the implications of this before you decide on this course of action.

Another way to reduce the tax you pay on your savings is to open an account in your child’s name. If they earn less than the tax-free allowance then you can build up their savings without any tax being deducted. As above, your child will need to sign a R85 form (or you will need to sign it on their behalf).

You should remember that such an account has to be opened only with the express purpose of saving for your child. There are also restrictions on how much you can gift to your child without paying tax.

When can I get my tax rebate

when will i get my tax  rebate

This is one of the most common questions that we get asked at Tax Fix. This article will help answer that question for you:

When will I get my tax refund?
You need to apply to get a tax refund, you will not get them automatically. You can apply for previous years tax refunds at any time. For the current tax year, you will need to wait until the year is over in April before you can claim a tax refund.

Once you apply refunds usually take between 4-6 weeks to processed and will depend on the back log with your tax office.

How can I calculate my tax refund?
At the end of the tax year you should be given a P60 from your employer. When you have this all you need to do is input your total income and total tax into our tax rebate calculator

Press on the ‘calculate’ button and it will let you know if you are due a tax rebate.

Do tax rebates expire?
Yes, that’s why we recommend that you apply for them as soon as possible. The current expiry date is 6 years but this will be changing shortly.


Further Reading:

Disclaimer: The above information can not be taken as advice and is for illustration purposes only. Please call Tax Fix before making any claims or confirmation. Tax Fix can not accept any liability for action taken and any losses incurred.