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| AUTUMN
BUDGET 2024: TAX RATES AND ALLOWANCES |
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|
Income tax rates: England,
Wales & Northern Ireland (non-dividend
income) (note 1)
|
2025/26 |
2024/25 |
0%
starting rate for savings only |
Up
to £5,000 |
Up
to £5,000 |
|
0% on personal allowance
(subject to any clawback of PA) |
£0 - £12,570 |
£0 - £12,570 |
|
20% basic rate tax |
£12,571
- £50,270 |
£12,571
- £50,270 |
| 40% higher
rate tax |
£50,271
- £125,140 |
£50,271
- £125,140 |
|
45% additional rate tax |
Above £125,140 |
Above £125,140 |
Note
1: The Welsh Government has made a commitment
not to raise Welsh rates of income tax. Therefore,
Welsh taxpayers will continue to pay the same
rates as their English and Northern Irish
counterparts.
The income tax bands will remain frozen until
tax year 2027-28. From April 2028, personal
tax thresholds will be uprated in line with
inflation. |
|
Scottish rates of income
tax (non-dividend income) (note 2) |
|
0% on personal allowance (subject to any
clawback of PA) |
£0 - £12,570 |
£0 - £12,570 |
|
19% starting rate |
£12,571 - £15,397 |
£12,571 - £14,876 |
|
20% basic rate tax |
£15,398 - £27,491 |
£14,877 - £26,561 |
|
21% intermediate rate tax |
£27,492 - £43,662 |
£26,562 - £43,662 |
| 42% higher
rate tax |
£43,663
- £75,000 |
£43,663
- £75,000 |
| 45% advanced
rate |
£75,001
- £125,140 |
£75,001
- £125,140 |
|
48% top rate |
Above £125,140 |
Above £125,140 |
|
Note 2: Scottish
taxpayers pay the same tax as the rest of
the UK on dividends and savings interest. |
|
Income tax rates (dividend
income) |
2025/26 |
2024/25 |
|
Dividend allowance |
£500 |
£500 |
|
Dividend ordinary rate (for dividends within
basic rate band) |
8.75% |
8.75% |
|
Dividend upper rate (for dividends within
higher rate band) |
33.75% |
33.75% |
|
Dividend additional rate (for dividends
above higher rate band) |
39.35% |
39.35% |
|
Child benefit/guardian’s
allowance rates (notes 3 and 4) |
|
|
|
Higher rate (eldest or only child) (per
week) |
£26.05 |
£25.60 |
|
Other children |
£17.25 |
£16.95 |
|
Guardian’s allowance per week |
£22.10 |
£21.75 |
Note
3: from April 2024, the threshold for High
Income Child Benefit Charge (HICBC) is increased
to £60,000 (from £50,000) with
the taper band extended to £80,000.
Therefore, the charge reduces the financial
benefit of receiving child benefit for those
with ‘adjusted net income’ between
£60,000 and £80,000. The benefit
is removed completely for taxpayers with income
above £80,000.
Note 4: from January 2021, child benefit payments
may be available in respect of children living
overseas in certain countries only. |
|
Personal allowances |
2025/26 |
2024/25 |
|
Personal allowance |
£12,570 |
£12,570 |
|
Dividend allowance (no allowance for trustees) |
£500 |
£500 |
|
Maximum married couple’s allowance
for those born before 6 April 1935 (note
5) |
£11,270 |
£11,080 |
|
Married couple’s allowance –
minimum amount |
£4,360 |
£4,280 |
|
Micro entrepreneur’s allowance (property
or trading income) |
£1,000
each
|
£1,000
each
|
|
Income limit for personal allowance (note
6) |
£100,000 |
£100,000 |
|
Income limit for married couple’s
allowance: born before 6 April 1935 |
£37,700 |
£37,000 |
|
Blind person’s allowance |
£3,130 |
£3,070 |
|
Rent-a-room relief |
£7,500 |
£7,500 |
|
Transferable/shareable tax allowance for
married couples and civil partners (note
7) |
£1,260 |
£1,260 |
| Personal
savings allowance for basic rate taxpayers |
£1,000 |
£1,000 |
|
2025/26 |
2024/25 |
| Personal
savings allowance for higher rate taxpayers |
£500 |
£500 |
|
Personal savings allowance for additional
rate taxpayers |
£0 |
£0 |
Note
5: this allowance is reduced by £1
for every £2 of income in excess of
the income limit, but married couple’s
allowance will not reduce below £4,360
for 2025/26 and £4,280 for 2024/25. |
|
Note 6: personal
allowances are subject to the £100,000
income limit, which applies regardless of
the individual’s date of birth. The
individual’s personal allowance is
reduced where their income is above this
limit. The allowance is reduced by £1
for every £2 above the limit, down
to zero. |
|
Note 7: this allowance
is available to married couples and civil
partners who are not in receipt of married
couple’s allowance. A spouse or civil
partner
who is not liable to income tax, or not
liable at the higher or additional rates,
can transfer this amount of their unused
personal allowance to their spouse or civil
partner. The recipient must not be liable
to income tax at the higher or additional
rates.
If the couple marry or register a civil
partnership, they will get the allowance
on a pro-rata basis for the rest of that
tax year. If one of them dies or there is
a divorce or separation, the allowance continues
until the end of the tax year.
|
|
National insurance |
2025/26 |
2024/25 |
|
Lower earnings limit, primary class 1 (per
week) |
£125 |
£123 |
|
Upper earnings limit, primary class 1 (per
week) |
£967 |
£967 |
|
Apprentice upper secondary threshold (AUST)
for under 21s/25s |
£967 |
£967 |
| Primary
threshold (per week) |
£242 |
£242 |
|
Secondary threshold (per week) |
£96 |
£175 |
|
Employment allowance (per year/employer) |
£10,500 |
£5,000 |
|
Employee’s primary class 1 rate between
primary threshold and upper earnings limit
|
8% |
8% |
|
Employee’s primary class 1 rate above
upper earnings limit |
2% |
2% |
|
Married woman’s reduced rate between
primary threshold and upper earnings limit |
1.85% |
1.85% |
|
Married woman’s rate above upper
earnings limit |
2% |
2% |
| Employer's
secondary class 1 rate above secondary threshold
|
15% |
13.8% |
| Class
2 small profits threshold (per year) |
£6,845 |
£6,725 |
| Class
2 lower profits threshold (per year) |
£12,570 |
£12,570 |
| Class
2 (where profits are below small profit threshold
(voluntary per week) |
£3.50 |
£3.45 |
| Class
2 rate (per week where profits are above small
profits threshold) |
£0 |
£0 |
| Class
3 voluntary rate (per week) |
£17.75 |
£17.45 |
|
Class 4 lower profits limit |
£12,570 |
£12,570 |
|
2025/26 |
2024/25 |
|
Class 4 upper profits limit |
£50,270 |
£50,270 |
|
Class 4 rate between lower profits limit
and upper profits limit |
6% |
6% |
|
Class 4 rate above upper profits limit
|
2% |
2% |
|
Class 1A/1B NIC |
15% |
13.8% |
| |
Pensions |
2025/26 |
2024/25 |
|
Annual allowance (note 8) |
£60,000 |
£60,000 |
|
Money purchase annual allowance |
£10,000 |
£10,000 |
| Lump
sum allowance |
£268,275 |
£268,275 |
| Lump
sum and death benefit allowance |
£1,073,100 |
£1,073,100 |
| Overseas
transfer allowance |
£1,073,100 |
£1,073,100 |
|
Note 8: individuals
with a high income have had a tapered annual
allowance, where for every £2 of adjusted
income over a threshold, an individual’s
annual allowance is reduced by £1.
From April 2023, the annual allowance is
£10,000 for individuals with total
adjusted income (including pension accrual)
over £260,000. |
| Reliefs
and incentives |
2025/26 |
2024/25 |
|
Enterprise Investment Scheme (EIS) –
maximum (note 9) |
£1,000,000 |
£1,000,000 |
| Venture
Capital Trust (VCT) – maximum |
£200,000 |
£200,000 |
| Seed
Enterprise Investment Scheme (SEIS) –
maximum (note 10) |
£200,000 |
£200,000 |
| Enterprise
Management Incentive Scheme (EMI) –
employee limit up to the value of £250,000
in a three-year period |
£250,000 |
£250,000 |
| Income
tax relief on EIS schemes |
30% |
30% |
| Income
tax relief on VCT schemes |
30% |
30% |
|
Income tax relief on SEIS schemes |
50% |
50% |
|
Note 9: from 6 April 2018, the annual limit
is doubled to £2m, provided that any
amount over £1m is invested in one
or more knowledge-intensive companies.
Note 10: capital gains tax reinvestment
relief may also be available for investments
made up to 50% of the amount invested.
| Individual
Savings Account (ISA) |
2025/26 |
2024/25 |
| ISA
(NISA) annual limit (note 11) |
£20,000 |
£20,000 |
| Junior
ISA investment annual limit –
under 18, living in the UK |
£9,000 |
£9,000 |
| Child
Trust Fund annual limit |
£9,000 |
£9,000 |
| Lifetime
ISA annual limit (note 12) |
£4,000 |
£4,000 |
|
| Note
11: all ISA limits are frozen until 5 April
2030.
Note 12: to open a Lifetime ISA, you must
be 18 or over but under 40. Contributions
can be made until the age of 50. The government
will add a 25% bonus to the savings, up
to a maximum of £1,000 per year. The
lifetime ISA limit of £4,000 counts
towards the annual ISA limit.
|
|
Capital gains tax |
2025/26 |
2024/25 |
|
Basic rate individual taxpayer (other than
residential property and carried interest)
From 6 April 2024 to 29 October 2024
From 30 October 2024 to 5 April 2025
|
18% |
10%
18%
|
|
Higher rate taxpayer / Main rate for trustees
and personal representatives (other than
residential property and carried interest)
From 6 April 2024 to 29 October 2024
From 30 October 2024 to 5 April 2025
|
24% |
20%
24%
|
|
Rate on sale of residential property –
basic rate taxpayer |
18% |
18% |
|
Rate on sale of residential property –
higher rate taxpayer, trustees and personal
representatives |
24% |
24% |
|
Rate on gains on carried interest –
basic rate taxpayer |
18% |
18% |
| Rate
on gains on carried interest – higher
rate taxpayer, trustees and personal representatives |
32% |
28% |
| Annual
exemption – individuals, personal representatives
and trusts for disabled persons |
£3,000 |
£3,000 |
| Annual
exemption – other trusts |
£1,500 |
£1,500 |
| Business
Assets Disposal Relief lifetime limit |
£1,000,000 |
£1,000,000 |
Investors’
Relief lifetime limit
From 6 April 2024 to 29 October 2024
From 30 October 2024 to 5 April 2025
|
£1,000,000 |
£10,000,000
£1,000,000 |
| Business
Assets Disposal Relief / Investors’
rate (note 13) |
14% |
10% |
| Chattels
exemption |
£6,000 |
£6,000 |
Note 13: the business asset disposal relief
and investors’ relief will rise to 14%
from 6 April 2025 and will match the main
lower rate of 18% from 6 April 2026.
| Inheritance
tax |
2025/26 |
2024/25 |
| Single
person’s nil-rate band (note 14) |
£325,000 |
£325,000 |
| Single
person’s 40% band |
over
£325,000 |
over
£325,000 |
| Residence
nil-rate band (RNRB) – maximum
(note 15) |
£175,000 |
£175,000 |
| Reduced
rate (note 16) |
36% |
36% |
| IHT
rate (for chargeable lifetime transfers) |
20% |
20% |
| Married
couples or civil partnerships allowance
nil-rate band |
£650,000 |
£650,000 |
| Gifts
to charities |
Exempt |
Exempt |
| Small
gifts to same person |
£250 |
£250 |
| General
gifts – annual exemption |
£3,000 |
£3,000 |
| Wedding
gifts to children |
£5,000 |
£5,000 |
| Wedding
gifts to grandchildren |
£2,500 |
£2,500 |
| Wedding
gifts to any other person |
£1,000 |
£1,000 |
Note 14: all unspent pension pots will
be brought into the scope of inheritance
tax from April 2027.
Note 15: the RNRB is available in respect
of a main residence given away to children
(including adopted, foster or stepchildren).
Any unused nil-rate band transfers to the
deceased’s spouse or civil partner,
even where death predates the availability
of the additional threshold. It applies
in addition to the existing nil-rate band
(NRB) or threshold (currently £325,000)
if the individual and estate meet the qualifying
conditions. Inheritance tax nil-rate band
and residence nil-rate band – thresholds
are maintained at the current level until
April 2028.
Note 16: the estate can pay inheritance
tax at a reduced rate of 36% on some assets
if you leave 10% or more of the net value
to charity in your will.
|
|
Business property relief |
2025/26 |
2024/25 |
|
Business or interest in a business and
transfers of unquoted shareholdings (note
17) |
100% |
100% |
|
Note 17: from April 2026, agricultural
property relief and business property relief
are proposed to be restricted 100% for the
first £1 million combined value and
it will be 50% thereafter. |
|
Taxation of trusts (Accumulation or discretionary
trusts) |
2025/26 |
2024/25 |
|
Trust income up to £1,000 –
dividend type income |
8.75% |
8.75% |
| Trust
income up to £1,000 – all other
income |
20% |
20% |
| Trust
income over £1,000 – dividend
type income |
39.35% |
39.35% |
|
Trust income over £1,000 –
all other income |
45% |
45% |
|
Taxation of trusts (Interest
in possession trusts) |
2025/26 |
2024/25 |
|
Dividend-type income |
8.75% |
8.75% |
|
All other income |
20% |
20% |
Corporation
tax |
2025/26 |
2024/25 |
|
All profits and gains (excluding determination
agreements and diverted profits)
Small profits rate (companies with profits
under £50,000)
Main rate of corporation tax (companies
with profits over £250,000)
|
19%
25%
|
19%
25%
|
|
Limits for marginal relief |
£50,000 -
£250,000 |
£50,000 -
£250,000 |
|
Standard fraction for
marginal relief |
3/200 |
3/200 |
|
S.455 tax on loans made by close companies
to participators |
33.75% |
33.75% |
| |
Capital
allowances |
2025/26 |
2024/25 |
|
Main writing-down allowance (reducing balance) |
18% |
18% |
| Special
rate writing-down allowance (reducing balance) |
6% |
6% |
| Structures
and buildings allowance (SBA) |
3% |
3% |
| Full
expensing (main rate plant and machinery)
(note 18) |
100% |
100% |
| Full
expensing (special rate plant and machinery)
(note 18) |
50% |
50% |
| Motor
cars if CO2 > 1/km but does not exceed
50g/km) |
18% |
18% |
| Motor
cars if CO2 > 50g/km |
6% |
6% |
| First-year
allowances (FYA) – New and unused motor
cars if CO2 emissions are 0 g/km or car is
electric (note 19) |
100% |
100% |
| Small
pool write-off where written-down value (WDV)
is £1,000 or less |
100% |
100% |
| FYA for
electric charge points (note 19) |
100% |
100% |
| Annual
investment allowance (AIA) |
£1,000,000 |
£1,000,000 |
| AIA rate |
100% |
100% |
Note 18: Full expensing allows the deduction
of 100%/50% of the cost of certain plant and
machinery from the profits before tax. This
measure is effective from 1 April 2023 to
31 March 2026.
Note 19: From April 2021, the thresholds for
FYA will be reduced from 50g/km to 0g/km.
Main rate of 18% capital allowance will be
applicable for business cars with CO2 emissions
not exceeding 50g/km. Business cars with CO2
emissions exceeding 50g/km will be eligible
for writing-down allowance at the special
rate of 6%. First year allowance on electric
cars and electric charge points is extended
to 31 March 2026.
|
Research
and development tax credit rates |
2025/26 |
2024/25 |
|
R&D merged scheme (note 20) |
20% |
20% |
|
R&D Intensive SME deduction rate |
186% |
186% |
|
R&D Intensive SME payable credit |
14.5% |
14.5% |
|
R&D Intensive SME intensity ratio (note
21) |
30% |
30% |
Note 20: From April 2024, both R&D
tax credits and RDEC schemes are merged, and
relief is available at a flat rate of 20%.
SME R&D payable credit is only available
to R&D intensive companies. Note
21: Loss-making SMEs whose R&D expenditure
constitutes at least 30% (for accounting
periods beginning on or after 1 April 2024)
of total expenditure are referred to as
‘R&D intensive SMEs’.
|
| Patent
box |
2025/26 |
2024/25 |
|
Patent box |
10% |
10% |
|
VAT |
2025/26 |
2024/25 |
|
Standard rate |
20% |
20% |
|
Reduced rate |
5% |
5% |
| Zero
rate |
0% |
0% |
| Flat
rate of VAT on gross turnover (for limited
cost trader) |
16.5% |
16.5% |
| Normal
scheme registration threshold |
£90,000 |
£90,000 |
| Deregistration
threshold |
£88,000 |
£88,000 |
| Cash
and annual accounting scheme – maximum
to join |
£1,350,000 |
£1,350,000 |
| Cash
and annual accounting scheme – exit
threshold |
£1,600,000 |
£1,600,000 |
| Flat-rate
scheme – maximum allowed to join |
£150,000 |
£150,000 |
|
Flat-rate scheme exit threshold |
£230,000 |
£230,000 |
| |
Annual
tax on enveloped dwellings (ATED) |
2025/26 |
2024/25 |
|
More than £0.5m but not more than
£1m |
£4,450 |
£4,400 |
|
More than £1m but not more than £2m |
£9,150 |
£9,000 |
|
More than £2m but not more than £5m |
£31,050 |
£30,550 |
|
More than £5m but not more than £10m |
£72,700 |
£71,500 |
|
More than £10m but not more than
£20m |
£145,950 |
£143,550 |
|
More than £20m |
£292,350 |
£287,500 |
| |
| Economic
crime (anti-money laundering) levy (note 23) |
2025/26 |
2024/25 |
| Small
entity (less than £10.2m UK revenue) |
n/a |
n/a |
| Medium
entity (UK revenue £10.2m - £36m) |
£10,000 |
£10,000 |
| Large
entity (UK revenue £36m - £1bn) |
£36,000 |
£36,000 |
| Very
large entity (UK revenue more than £1bn) |
£500,000 |
£500,000 |
|
Note 23: The Economic Crime Levy (ECL)
is an annual charge that will affect entities
(organisations) who are supervised under
the Money
Laundering Regulations (MLR) and whose UK
revenue exceeds £10.2 million per
year. This is subject to the proposed changes
in definition
of companies’ size thresholds. |
|
December 2024
ACCA LEGAL NOTICE
This is a basic guide prepared by ACCA UK's
Technical Advisory Service for members and
their clients. It should not be used as
a definitive guide, since individual circumstances
may vary. Specific advice should be obtained,
where necessary. |
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