What is my 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 is £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 won’t have a personal allowance. Anything you earn above your personal allowance will be subject to income tax.
What income tax band am I in?
How much income tax you pay depends on what band you fall into. For the 2024/25 tax year in England, Wales and Northern Ireland, these are:
• Personal Allowance: You do not pay any tax on earnings up to £12,570.
• Basic rate: You will pay 20% tax on anything you earn between £12,571 and £50,270.
• Higher rate: You will pay 40% tax on anything you earn between £50,271 and £125,140.
• Additional rate: You will pay 45% tax on anything you earn over £125,140.
For example, a basic rate taxpayer who earns £40,000 per year, will pay no tax on the first £12,570 they earn. The remaining £27,430 of their salary will be taxed at 20%.
What tax do I pay on savings income?
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 = £1,000 allowance
• Higher rate taxpayers = £500 allowance
• Additional rate taxpayers = £0 allowance
You may be able to earn up to £5,000 interest without paying tax. This is known as your starting rate for savings. If your other income (wages or pension) is £17,570 or more you’re not eligible for the starting rate for savings. If your other income is less than £17,570 your starting rate for savings is a maximum of £5,000. Every £1 of other income above your personal allowance reduces your starting rate for savings by £1.
What tax do I pay on dividend income?
Here you can see the tax rates on dividend income for the 2024/25 tax year. You’ll get a £500 tax-free dividend allowance, but for anything above that you’ll need to pay the following:
• Basic rate taxpayers = 8.75%
• Higher rate taxpayers = 33.75%
• Additional rate taxpayers = 39.35%
Please note, the rates applicable to trusts are different from those stated above.
If you have a Stocks and Shares ISA, your dividends are sheltered from UK tax so these rates won’t apply.
What is the ISA allowance for 2024/2025?
For ISAs, how much you can save or invest across the 2024/25 tax year is as follows:
| Type of ISA | 2024/25 |
| Total ISA limit excluding Junior ISAs (JISAs) | £20,000 |
| Lifetime ISA | £4,000 |
| Junior ISA | £9,000 |
How much tax relief can I get on pension contributions?
Depending on your tax band, you’ll get a certain percentage of tax relief on your pension contributions:
| Tax band | % of tax relief |
| Basic rate | 20% |
| Higher rate | 40%* |
| Top rate | 45%** |
*Higher rate taxpayers get an additional 20% of tax relief on any income they have paid 40% tax on.
**Top rate taxpayers get additional tax relief of 25% up to the amount of income they have paid 45% tax on.
Tax relief is limited to relief on contributions up to the higher of:
• 100% of your UK taxable earnings
• £3,600
There is a limit to how much you can contribute to all your pensions before facing a tax charge:
| Pension contribution limits | 2024/25 |
| Annual allowance* | £60,000 |
| Money purchase annual allowance | £10,000 |
*Reduced by £1 for every £2 of adjusted income over £260,000 to a minimum of £10,000, subject to threshold income being over £200,000.
What are the capital gains tax rates?
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. For example, on a property that’s not your main home or certain business assets.
For the 2024/25 tax year, a few of the rates have changed. The new rates are:
| Tax rates | 2024/25 |
| Main rates for individuals other than gains on residential property (not eligible for Private Residence Relief) and carried interest | Income tax basic rate payer = 10% Income tax higher rate payer = 20% |
| Rates for individuals (for gains on residential property not eligible for Private Residence Relief) | Income tax basic rate payer = 18% Income tax higher rate payer = 24% |
| Rates for individuals (for gains on carried interest) | Income tax basic rate payer = 18% Income tax higher rate payer = 28% |
| Main rate for trustees and personal representatives other than gains on residential property (not eligible for Private Residence Relief) and carried interest | 20% |
| Rate for trustees and personal representatives (for gains on residential property not eligible for Private Residence Relief) | 24% |
| Rate for personal representatives for gains on carried interest | 28% |
| Annual exempt amount (AEA) for individuals and personal representatives | £3,000 |
| Annual exempt amount for most trustees | £1,500 |
What are the current inheritance tax rates?
Inheritance tax may be paid on your estate when you die, reducing how much value will pass to your beneficiaries. It applies to estates worth more than £325,000, with everything over this threshold taxed at 40%. For the main rates for 2024/25, see the table below.
| Inheritance tax rates | 2024/25 |
| Nil-rate band* | £325,000 |
| Residence nil-rate band** | £175,000 |
| Rate of tax on excess | 40% |
| Rate if at least 10% of net estate left to charity | 36% |
| Lifetime transfers to and from certain trusts | 20% |
| Overseas domiciled spouse/civil partner exemption | £325,000 |
*Up to 100% of the unused proportion of a deceased spouse’s/civil partner’s nil-rate band and/or residence nil-rate band can be claimed on the survivor’s death
**Estates over £2,000,000: the value of the residence nil rate band is reduced by 50% of the excess over £2,000,000
Bear in mind that pension and tax rules can change and benefits depend on your circumstances.
What next?
There is valuable time left to make use of some valuable tax allowances. Some currently roll over, others don’t. If you can, it’s advisable to make use of every allowance you’re presented with whilst its available.
For 2024/25 tax year, some personal allowances have changed. If you’d like to discuss what allowance you can utilise immediately or what opportunities the new limits offer now, don’t hesitate to get in touch with one of our Financial Advisers.
You can book a free consultation with one of our Financial Advisers to learn more about your tax allowances and how we can help you.
Disclaimer
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