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 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 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.
In practice, a basic rate taxpayer who earns £45,000 per year, will pay no tax on the first £12,570 they earn. The remaining £32,430 of their salary will be taxed at 20%.
If you live in Scotland, your income tax band will be different from those listed above. For the 2024/25 tax year the bands are:
- Personal Allowance: You do not pay any tax on earnings up to £12,570.
- Starter rate: You will pay 19% tax on anything you earn between £12,571 and £14,876.
- Basic rate: You will pay 20% tax on anything you earn between £14,877 to £26,561.
- Intermediate rate: You will pay 21% tax on anything you earn between £26,562 to £43,662.
- Higher rate: You will pay 42% tax on anything you earn between £43,663 to £75,000.
- Advanced rate: You will pay 45% tax on anything you earn between £75,001 to £125,140. Advanced Rate is a new tax rate that took effect from the start of the 2024/25 tax year.
- Top rate: You will pay 48% tax on anything you earn over £125,141.
What tax do I pay on savings and dividend income?
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 = £1,000 allowance
- Higher-rate taxpayers = £500 allowance
- Additional rate = £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.
Tax 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:
Type of tax | 2024/2025 | |
|---|---|---|
| Tax rates on dividend income | Basic rate Higher rate Additional rate | 8.75% 33.75% 39.35% |
| Rates applicable to trusts | Trust income up to £1,000 Dividend type income All other income Trust income over £1,000 Dividend type income All other income |
8.75% 20%
39.35% 45% |
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, the amount that you can save or invest across the 2024/25 tax year has remained the same (£20,000). However, from 6th April 2024 you can now spread that allowance across more than one of each type of ISA (cash or stocks and shares) per tax year.
For example, you could now save £8,000 in multiple cash ISAs and £12,000 in a number of stocks and shares ISAs in the same year. Previously, you could only contribute to one of each type.
Type of ISA | 2024/25 |
|---|---|
| Total ISA limit excluding Junior ISAs (JISAs) | £20,000 |
| Lifetime ISA | £4,000 |
| JISA and Child Trust Fund | £9,000 |
For other tax incentivised investments, there are investment limits for which you can claim tax relief. For the 2024/25 tax year, these are:
| Type of investment | 2024/25 |
|---|---|
| Venture Capital Trust (VCT) at 30% | £200,000 |
| Enterprise Investment Scheme (EIS) at 30%* | £2,000,000 |
| EIS eligible for CGT deferral relief | No limit |
| Seed EIS (SEIS) at 50% | £200,000 |
| SEIS CGT reinvestment relief | 50% (capped at £100,000) |
* At least £1,000,000 must be invested in knowledge-intensive companies for the maximum tax relief to apply. Otherwise, the maximum amount you can claim relief on is £1,000,000.
How much tax relief can I get on pension contributions?
If you’re saving into a pension, you’re likely aware of the tax break benefits. 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 rates on pensions are different for Scotland.
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 | Annual allowance |
|---|---|
| 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 |
|---|---|
| Individuals: below UK higher rate income tax band | 18% |
| Individuals: within UK higher and additional rate income tax bands | 24% |
| Trusts and estates | 24% |
| Basic rate on carried interest* | 18% |
| Higher rate on carried interest* | 28% |
| Residential property disposals | 24% |
| Annual exempt amount (for individuals, estates, etc.) | £3,000 |
| Annual exempt amount (for trusts generally) | £1,500 |
There’s also the Business Asset Disposal Relief, which allows those eligible to pay tax at a reduced rate on the profit made from the sale of their company. You’ll need to have held the business or company in question for at least two years with a minimum 5% participation. If eligible, you’ll pay 10% tax* on all gains on qualifying assets.
* These rates are due to rise in April 2025
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%. You can learn more about this in our guide to inheritance tax planning. 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.