Your Quick Guide to 2024/25 UK Tax Rates and Reliefs
Tax season is coming, and whether you're a business owner or an individual taxpayer, it's essential to stay updated on the latest rates and reliefs for 2024/25.
Here's a breakdown of the key tax rates.
1. Corporation Tax
For the 2024/25 financial year, businesses are subject to Corporation Tax based on profits:
Small profits rate (profits up to £50,000): 19%
Main rate (profits over £250,000): 25%
For profits between £50,001 and £250,000, a marginal rate of 26.5% applies.
Companies should also be aware of full expensing for qualifying capital assets, such as plant and machinery, with 100% relief available.
2. Income Tax
For 2024/25, the income tax rates remain similar to previous years:
Basic rate (up to £37,700): 20%
Higher rate (£37,701 to £125,140): 40%
Additional rate (over £125,140): 45%
Dividend income will also be taxed at three rates:
8.75% for basic rate taxpayers
33.75% for higher rate taxpayers
39.35% for additional rate taxpayers
Don't forget the personal allowance remains at £12,570 for most, with a limit of £100,000. However, the dividend allowance has reduced from £1,000 to £500.
The marriage allowance is still available, allowing eligible couples to transfer £1,260 of personal allowance.
3. National Insurance Contributions (NICs)
Employers and employees face the following rates for 2024/25:
Employee contributions:
8% on earnings between £242.01 and £967 per week
2% on earnings above £967 per week
Employer contributions:
13.8% on earnings over £175 per week
Self-employed individuals pay Class 4 NICs at 6% on profits between £12,570 and £50,270, plus 2% on profits above that.
4. Capital Gains Tax (CGT)
Individuals selling assets such as shares or property will be subject to Capital Gains Tax:
Annual exemption: £3,000 (down from £6,000 in 2023/24)
Basic rate taxpayers: 10% on standard assets (18% on residential property)
Higher/additional rate taxpayers: 20% on standard assets (24% on residential property)
5. Property Taxes
Property transactions continue to attract Stamp Duty, with different rates for England, Wales, and Scotland. In England, the first £250,000 for residential properties attracts nil stamp duty.
Stamp Duty Land Tax (SDLT):
5% on the portion of residential property values between £250,001 and £925,000
10% on values between £925,001 and £1.5 million
12% on values above £1.5 million
6. VAT and Other Key Updates
The VAT registration threshold increases to £90,000 from 1st April 2024, while the deregistration threshold rises to £88,000. VAT remains at 20%, with a reduced rate of 5% for specific goods and services.
Additionally, tax relief schemes like the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) continue to offer incentives for investments in small, unquoted companies, with up to 30% income tax relief under EIS.
Make sure you're taking advantage of all available tax reliefs and are fully aware of your obligations. Have a wonderful 2024/25 tax year!
