Hey there, business owners and tax enthusiasts! 🙌 Are you ready to dive into the exciting world of UK tax rates, thresholds, and allowances? We know it can be a bit overwhelming, but don’t worry – we’ve got your back! 💪
In this blog post, we’ll break down the key information you need to know for the 2023/24 and 2024/25 tax years. Whether you’re a sole trader, limited company, partnership, or employer, we’ve got you covered. 😎
Personal Allowance: Your Tax-Free Threshold 💰
First things first, let’s talk about the Personal Allowance. This is the amount of income you can earn before you start paying income tax. For both the 2023/24 and 2024/25 tax years, the Personal Allowance remains at £12,570. Easy peasy! 😄
Income Tax Rates and Bands: What You’ll Pay 💸
Now, let’s get into the nitty-gritty of income tax rates and bands. In England, Wales, and Northern Ireland, the tax bands for 2023/24 and 2024/25 are:
- Basic rate (20%): £12,571 to £50,270
- Higher rate (40%): £50,271 to £125,140
- Additional rate (45%): £125,141 and above
Scotland has its own tax bands and rates, so make sure to check those out if you’re a Scottish taxpayer! 🏴
National Insurance: Contributions for All 🌟
Next up, let’s talk about National Insurance (NI). Most people pay NI if they’re over 16 and earning above certain thresholds. The type of NI you pay depends on your employment status and how much you earn.
Employees (Class 1 Primary NI)
- 2023/24: 12% on earnings between £242 and £967 per week
- 2024/25: 8% on earnings between £242 and £967 per week
Employers (Class 1 Secondary NI)
- 2023/24 and 2024/25: 13.8% on earnings above £175 per week
Self-Employed (Class 2 and Class 4 NI)
- Class 2 NI will be abolished from April 2024
- Class 4 NI in 2024/25: 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270
Capital Gains Tax: Disposing of Assets 🏠
If you make a profit from selling or ‘disposing of’ an asset, you might need to pay Capital Gains Tax (CGT). The annual exempt amount for individuals in 2024/25 is £3,000. The CGT rates for residential property are 18% for basic rate taxpayers and 24% for higher rate taxpayers.
Corporation Tax: Rates for Companies 🏢
Limited companies pay Corporation Tax on their profits. In 2024/25:
- Profits up to £50,000: 19% tax rate
- Profits over £250,000: 25% tax rate
- Profits between £50,000 and £250,000: Marginal relief applies
Dividend Tax: Rates and Allowances 📊
If you receive dividend income, you’ll need to pay tax on amounts above the dividend allowance. In 2024/25, the dividend allowance is £500, and the tax rates are:
- Basic rate: 8.75%
- Higher rate: 33.75%
- Additional rate: 39.35%
VAT: Registration and Rates 🛒
From 1st April 2024, the VAT registration threshold increases to £90,000, and the deregistration threshold rises to £88,000. The standard VAT rate remains at 20%.
Wrapping Up 🎉
Phew! That was a lot of information, but you made it through! Remember, staying on top of tax rates, thresholds, and allowances is crucial for running your business efficiently and compliantly.
If you need help navigating the wild world of taxes, our team of expert accountants is here to help. Get in touch today for a chat! 📞
Until next time, happy tax planning! 🎉
