Iceland vs United Kingdom
Tax Rate Comparison
Enter your income below for a personal tax estimate, then scroll down for full rate breakdowns.
๐ฐ Personal Income Tax Calculator
Enter your income to see your estimated annual tax liability in each country โ side by side.
๐ฎ๐ธ Iceland โ Municipal Income Tax
Iceland's 69 municipalities set their own local income tax rates, ranging from ~12.44% to ~14.52%, averaging ~14.45%. This is added to the national income tax. The combined effective rate for most earners is about 36.94% (national + municipal). Iceland has no inheritance tax on direct heirs. Real estate transfer tax (stimpilgjald) is 0.8% on property transfers. Iceland is not an EU member but belongs to the EEA, affecting VAT and trade rules.
๐ฌ๐ง United Kingdom โ Devolved, Council & Business Rates
Scotland sets its own income tax bands (six bands; top rate 48%). Wales has limited income tax-varying powers. Northern Ireland follows UK rates. All residents pay Council Tax to local authorities (typically ยฃ1,200โยฃ4,000+/year). Business rates are set nationally but collected locally. SDLT applies to property purchases (LBTT in Scotland, LTT in Wales).
Iceland vs United Kingdom: Key Tax Differences (2026)
๐ฐ Income Tax: ๐ฌ๐ง United Kingdom has a higher top income tax rate (~36.94% vs 0โ45%). ๐ฎ๐ธ Iceland is more favourable for high earners.
๐ VAT/Sales Tax: Iceland has a higher consumption tax (11โ24% vs 0โ20%).
๐ข Corporate Tax: ๐ฎ๐ธ Iceland offers a lower corporate rate (20% vs 25%), which can influence business location decisions.
๐ Capital Gains: ๐ฎ๐ธ Iceland taxes investment gains at a lower rate (22% vs 24%), benefiting investors.