Tax rates 2024/25
Catherine Alexander
Partner at GDA
Personal Tax Allowance
Your personal allowance is how much you can earn before paying income tax. For people who earn less than £100,000 per year, this has stayed at £12,570 for the 2024/25 tax year. If you earn between £100,000 and £125,140, the allowance decreases by £1 for every £2 you earn above £100,000, until it reaches £0. This means if you earn above £125,140, you will not have a personal allowance. Anything you earn above your personal allowance will be subject to income tax.
Income Tax Bands
You will pay basic rate tax at 20% on anything you earn between £12,571 and £50,270.
You will pay higher rate tax at 40% on anything you earn between £50,271 and £125,140.
You will pay additional rate tax at 45% on anything you earn over £125,140.
Income Tax on Savings
The personal savings allowance is how much interest you can earn on your savings without paying tax. Your allowance depends on your tax bracket, basic rate taxpayers have a £1,000 allowance, higher rate taxpayers have a £500 allowance, and additional rate taxpayers have no allowance.
Tax on Dividend Income
You will get a £500 tax-free dividend allowance, but for anything above that you will need to pay: 8.75% (basic), 33.75% (higher), and 39.35% (additional). If you have a stocks and shares ISA, your dividends are sheltered from UK tax so these rates will not apply.
ISA Allowances
The total amount that you can put into a a standard ISA in 2024/25 free of tax is £20,000. For a Lifetime ISA this is £4,000, and for a Junior ISA or Child Trust Fund, this is £9,000.
Capital Gains Tax for Individuals
If you make more than £3,000 in gains on an asset that you sell or give away, you might have to pay capital gains tax. Basic rate taxpayers are charged 18%, while higher and additional rate taxpayers are charged 24%.
Inheritance Tax Rates
The Nil-rate band is £325,000.
The Residence nil-rate band is £175,000.
The rate of tax on excess is 40%.
The rate of tax on excess if at least 10% of net estate left to charity is 36%.
Lifetime transfers to and from certain trusts attracts 20% tax.
This article isn’t personal advice. If you’re not sure whether a course of action is right for you, ask for financial advice.
