Tax Rates and Allowances
Red Parrot Accounting will work closely with you to ensure that you are in compliance with all tax laws and regulations.
Plant and Machinery
01.
Annual Investment Allowance (AIA)
Category | Limit (£) | Notes |
Companies | 1,000,000 | 100% write-off for most plant and machinery (not cars) |
Sole traders/partnerships | 1,000,000 | 100% write-off for most plant and machinery (not cars) |
02.
Writing Down Allowances (WDA)
Category | Annual Rate | Notes |
Main rate pool | 18% | Applies to most plant and machinery |
Special rate pool | 6% | Applies to certain plant and machinery |
03.
Structures and Buildings Allowance
Category | Rate | Notes |
Structures and Buildings | 3% | Applies to qualifying investments in non-residential structures/buildings |
04.
First Year Allowance (FYA)
Category | Rate | Notes |
Energy-efficient plant and cars | 100% | Applies to certain energy-efficient plant and cars (0 g/km emissions for cars purchased before 1 April 2025) |
Corporation tax FYA (full expensing) | 100% | For new, unused plant and machinery from 1 April 2023 |
Corporation tax FYA (long-life assets, etc.) | 50% | For new, unused long-life assets, integral features, etc., from 1 April 2023 |
05.
Cars
Category | Rate | Notes |
AIA availability for cars | Not available | AIA is not available for cars |
Cars acquired from April 2021 | ||
0 g/km emissions | 100% FYA (Main rate) | For new purchases |
≤ 50 g/km emissions | 18% WDA (Main rate) | For new purchases |
> 50 g/km emissions | 6% WDA (Special rate) | For new purchases |
Capital Gain Tax (CGT)
01.
Exemption Amounts
Category | 2024/25 (until 29/10/24) | 2024/25 (from 30/10/24) |
Individuals | £3,000 | £3,000 |
Trusts | £1,500 | £1,500 |
02.
Tax Rates for Individuals
Category | 2024/25 (until 29/10/24) | 2024/25 (from 30/10/24) |
Standard rate | 10% | 18% |
Higher rate | 20% | 24% |
- Higher rate applies to higher rate and additional rate taxpayers.
- Gains on residential property: Before 30 October 2024, higher rates of 18% and 24% may apply.
03.
Tax Rates for Trusts
Category | 2024/25 (until 29/10/24) | 2024/25 (from 30/10/24) |
Exemption | £1,500 | £1,500 |
Rate | 20% | 24% |
04.
Additional Reliefs
- Investors’ Relief: 10% on the first £10m of qualifying gains.
- Entrepreneurs’ Relief: 10% on the first £1 million of qualifying gains.
Note: Companies do not have an annual exempt amount and pay corporation tax on capital gains.
Child Benefit
01.
Eligibility
- Child Benefit is received by the person responsible for a child under 16, or under 19 if they are in education or training.
- Tax Charge applies if the person (or their spouse/partner) has an adjusted net income:
- Above £60,000: The person with the highest income must pay some of the Child Benefit as a tax charge.
- Above £80,000: The tax charge equals the Child Benefit received.
02.
Rates (2024/25)
Child | Weekly Rate (£) |
Eldest / Only Child | £25.60 |
Other Children | £16.95 |
Corporation tax
01.
Financial Year Structure
- A Financial Year runs from 1 April to the following 31 March.
- If a company’s accounting period spans 31 March, profits are apportioned to each Financial Year on a time basis.
02.
Rates for Year to 31.3.25
Profits Band (£) | Rate (%) |
Small profits rate | 0 – 50,000 |
Marginal rate | 50,001 – 250,000 |
Main rate | Over 250,000 |
03.
Marginal Relief Fraction
- Fraction: 3/200
04.
Northern Ireland Corporation Tax
- The Northern Ireland Executive plans to set the corporation tax rate at 12.5%, contingent on demonstrating financial sustainability.
Income tax
01.
Income Tax Rates (2024/25)
Type | Band of Taxable Income (£) | Rate (%) | Rate for Dividends (%) |
Basic rate | 0 – 37,700 | 20% | 8.75% |
Higher rate | 37,701 – 125,140 | 40% | 33.75% |
Additional rate | Over 125,140 | 45% | 39.35% |
02.
Scottish Residents (Non-savings and Non-dividend Income)
Type | Band of Taxable Income (£) | Rate (%) |
Starter rate | 0 – 2,306 | 19% |
Basic rate | 2,307 – 13,991 | 20% |
Intermediate rate | 13,992 – 31,092 | 21% |
Higher rate | 31,093 – 62,430 | 42% |
Advanced rate | 62,431 – 125,140 | 45% |
Top rate | Over 125,140 | 48% |
03.
Welsh Residents (Non-savings and Non-dividend Income)
Band of Taxable Income (£) | UK Rate (%) | Welsh Rate (%) | Overall Rate (%) |
0 – 37,700 | 10% | 10% | 20% |
37,701 – 125,140 | 30% | 10% | 40% |
Over 125,140 | 35% | 10% | 45% |
04.
Savings Allowance
Band of Taxpayer | Amount (£) | Rate (%) |
Basic rate | 1,000 | 0% |
Higher rate | 500 | 0% |
Additional rate | 0 | N/A |
05.
Dividend Allowance
Band of Taxpayer | Amount (£) | Rate (%) |
All | 500 | 0% |
Personal Allowance
01.
Personal Allowance
Allowance | 2024/25 (£) | 2023/24 (£) |
Personal allowance | 12,570 | 12,570 |
Marriage allowance | 1,260 | 1,260 |
Blind person’s allowance | 3,070 | 2,870 |
02.
Married Couple's Allowance (for individuals born before 6 April 1935)
Reduction in Tax Bill | 2024/25 (£) | 2023/24 (£) |
Maximum | 1,108.00 | 1,037.50 |
Minimum | 428.00 | 401.00 |
Age allowance income limit | 37,000 | 34,600 |
- The married couple’s allowance is reduced by £1 for every £2 of adjusted net income above the age allowance income limit.
03.
Marriage Allowance
- 10% of the personal allowance may be transferable between certain spouses where neither pays tax above the basic rate.
- The Marriage allowance is not available to couples entitled to the Married Couple’s allowance.
Individual Savings Accounts (ISAs)
01.
Tax Benefits
- Income from ISA investments is exempt from income tax.
- Capital gains from investments held in an ISA are exempt from capital gains tax.
02.
ISA Types and Limits
ISA Type | Annual Investment Limit (2023/24) | Annual Investment Limit (2022/23) |
Overall ISA Limit | £20,000 | £20,000 |
Junior ISA | £9,000 | £9,000 |
Help to Buy ISA | £200 per month | £200 per month |
Lifetime ISA | £4,000 | £4,000 |
03.
Types of ISAs
- Cash ISA, Stocks and Shares ISA, and Innovative Finance ISA: Can be invested in subject to the annual investment limit.
- Lifetime ISA:
- Available to individuals aged 18 to 40.
- Annual limit: £4,000.
- Government provides a 25% bonus (up to £1,000 per year).
- Funds can be used to buy a first home or saved until age 60 for tax-free access.
- Penalties apply for withdrawals in other circumstances.
- Help to Buy ISA:
- Government bonus: £50 for every £200 saved, up to a maximum bonus of £3,000 on £12,000 of savings.
- Closed to new savers on 30 November 2019; existing holders can save until 30 November 2029 and claim the bonus until 1 December 2030.
04.
ISA Transfers
- Investors can transfer investments from one ISA type to another.
Inheritance Tax (IHT)
01.
Thresholds
- Standard Nil Rate Band: £325,000.
- Residence Nil Rate Band (for current or former residences): £175,000.
02.
Rates
Rate | Rate (%) |
Lifetime Rate | 20% |
Death Rate | 40% |
Death Rate (if sufficient charitable legacies made) | 36% |
03.
Exemptions and Reliefs for Lifetime Gifts
- Annual Exemption: £3,000.
- Small Gifts Exemption: £250 per person.
- Marriage/Civil Partnership Exemption:
- Parent: £5,000.
- Grandparent: £2,500.
- Other spouse/civil partner: £2,500.
- Other: £1,000.
04.
Relief for Lifetime Gifts Within Seven Years of Death
Years Before Death | % of Death Charge |
0 – 3 | 100% |
3 – 4 | 80% |
4 – 5 | 60% |
5 – 6 | 40% |
6 – 7 | 20% |
05.
Other Key Points
- Lifetime and death transfers between UK-domiciled spouses are exempt from IHT.
- The IHT threshold on death may increase for surviving spouses if the nil rate band was not fully used.
- Reliefs are available for certain business and farming assets, reducing their value for IHT purposes.
- Lifetime gifts may be subject to IHT if made within seven years of death.
- Transfers of assets into trust may be subject to an immediate charge at lifetime rates.
Minimum Wage
01.
From 1 April 2024
Age Group | Rate (£) |
National Living Wage (NLW) – 21+ | £11.44 |
18-20 | £8.60 |
16-17 | £6.40 |
Apprentice | £6.40 |
02.
From 1 April 2023
Age Group | Rate (£) |
National Living Wage (NLW) – 21+ | £10.42 |
21-22 | £10.18 |
18-20 | £7.49 |
16-17 | £5.28 |
Apprentice | £5.28 |
03.
Key Points
- National Minimum Wage applies to employees up to age 20 (22 before 1 April 2024).
- National Living Wage (NLW) applies to employees 21 and over (23 and over before 1 April 2024).
- The Apprentice rate applies to apprentices under 19 or 19 and over in their first year of apprenticeship.
- Penalties may apply to employers who fail to meet these minimum wage rates.
National Insurance
01.
Class 1 NIC (Employees)
2024/25:
Earnings per week | Rate (%) |
Up to £242 | Nil |
£242.01 – £967 | 8 |
Over £967 | 2 |
- Entitlement to state pension and contribution-based benefits is retained for earnings between £123 and £242 per week.
2023/24 (From 6/1/24):
Earnings per week | Rate (%) |
Up to £242 | Nil |
£242.01 – £967 | 10 |
Over £967 | 2 |
2023/24 (To 5/1/24):
Earnings per week | Rate (%) |
Up to £242 | Nil |
£242.01 – £967 | 12 |
Over £967 | 2 |
02.
Class 1 NIC (Employers)
2024/25:
Earnings per week | Rate (%) |
Up to £175 | Nil |
Over £175 | 13.80 |
2023/24:
Earnings per week | Rate (%) |
Up to £175 | Nil |
Over £175 | 13.80 |
Other NIC Payable by Employers
- Class 1A: 13.8% on taxable benefits provided to employees and certain taxable termination and sporting testimonial payments exceeding £30,000.
- Class 1B: 13.8% on taxable PAYE Settlement Agreements.
03.
Class 2 NIC (Self-employed)
2024/25:
Class 2 NIC | Amount (£) |
Flat rate | £3.45 per week |
Small Profits Threshold (annual) | £6,725 |
2023/24:
Class 2 NIC | Amount (£) |
Flat rate | £3.45 per week |
Small Profits Threshold (annual) | £6,725 |
Lower Profits Limit (annual) | £12,570 |
04.
Class 4 NIC (Self-employed)
2024/25:
Annual profits | Rate (%) |
Up to £12,570 | Nil |
£12,570.01 – £50,270 | 6 |
Over £50,270 | 2 |
2023/24:
Annual profits | Rate (%) |
Up to £12,570 | Nil |
£12,570.01 – £50,270 | 9 |
Over £50,270 | 2 |
05.
Class 3 NIC (Voluntary Contributions)
- Flat rate per week: £17.45
- Used to fill or avoid gaps in National Insurance record to get a full State Pension (35 years, or 30 years if State Pension age is before 6 April 2016).
06.
Note
Class 2 NIC will no longer be required from 6 April 2024, but voluntary contributions can still be made.
Pension
01.
Tax Relief on Pension Contributions
Contribution Type | Amount | Details |
Personal Contributions | £3,600 (gross) or 100% of relevant earnings | Tax relief available for the higher amount |
Contribution Limit | £60,000 | Contributions over £60,000 may be subject to income tax |
Money Purchase Limit | £10,000 | Limit reduced to £10,000 once money purchase pensions are accessed |
Carry Forward | 3 years | Unused allowance may be carried forward for up to 3 years |
Tapered Annual Allowance | £260,000 | For income above £260,000, the annual allowance is reduced by £1 for every £2 of income, down to a minimum of £10,000 |
Employer Contributions | Wholly and Exclusively for Business | Employers may spread large contributions over several years for tax relief |
02.
Pensions Automatic Enrolment
Type | 2024/25 (£) | 2023/24 (£) | Details |
Automatic Enrolment Earnings Trigger | 10,000 | 10,000 | Minimum earnings to trigger auto enrolment |
Qualifying Earnings Band – Lower Limit | 6,240 | 6,240 | Lower threshold for qualifying earnings |
Qualifying Earnings Band – Upper Limit | 50,270 | 50,270 | Upper threshold for qualifying earnings |
Employer Minimum Contribution | 3% | 3% | Employer minimum contribution on qualifying earnings |
Total Minimum Contribution | 8% | 8% | Total minimum contribution (employer + employee) |
03.
State Pensions
State Pension Type | 2024/25 (£) | 2023/24 (£) | Details |
Basic State Pension | 169.50 | 156.20 | Paid to those who have made sufficient NI contributions/credits |
New State Pension | 221.20 | 203.85 | For those with 35 qualifying years of contributions/credits |
Stamp Duty and Land Tax
01.
Stamp Duty on Shares
Transaction Type | Tax/Rate | Details |
Electronic Purchase | 0.5% | Stamp Duty Reserve Tax (SDRT) |
Share Purchase (via Stock Transfer Form) | 0.5% | If transaction exceeds £1,000 |
02.
Stamp Duty Land Tax (SDLT) for Residential Property
Consideration (£) | Rate (%) |
0 – 250,000 | 0 |
250,001 – 925,000 | 5 |
925,001 – 1,500,000 | 10 |
1,500,001 and above | 12 |
Additional rates:
- An extra 3% applies to further residential properties purchased before 30 October 2024.
- An extra 5% applies to further residential properties purchased after 30 October 2024.
03.
First-time Buyer Relief (Residential Property)
Consideration (£) | Rate (%) |
0 – 425,000 | 0 |
425,001 – 625,000 | 5 |
Over 625,000 | Normal rates apply |
04.
Stamp Duty Land Tax for Non-Residential Property
Consideration (£) | Rate (%) |
0 – 150,000 | 0 |
150,001 – 250,000 | 2 |
Over 250,000 | 5 |
05.
Land and Buildings Transaction Tax (LBTT) for Residential Property (Scotland)
Consideration (£) | Rate (%) |
0 – 145,000 | 0 |
145,001 – 250,000 | 2 |
250,001 – 325,000 | 5 |
325,001 – 750,000 | 10 |
750,001 and above | 12 |
Additional rates:
- Residential property rates may increase by 6% until 5 December 2024 and by 8% after that date.
- First-time Buyer Relief raises the zero-rate tax threshold to £175,000.
06.
LBTT for Non-Residential Property (Scotland)
Consideration (£) | Rate (%) |
0 – 150,000 | 0 |
150,001 – 250,000 | 1 |
Over 250,000 | 5 |
07.
Land Transaction Tax (LTT) for Residential Property (Wales)
Consideration (£) | Rate (%) |
0 – 225,000 | 0 |
225,001 – 400,000 | 6 |
400,001 – 750,000 | 7.5 |
750,001 – 1,500,000 | 10 |
1,500,000 and above | 12 |
Additional rates:
- Higher rates may apply for further residential properties purchased.
08.
Higher Residential Tax Rates (Wales, Applies from 11 December 2024)
Consideration (£) | Rate (%) |
0 – 180,000 | 5 |
180,001 – 250,000 | 8.5 |
250,001 – 400,000 | 10 |
400,001 – 750,000 | 12.5 |
750,001 – 1,500,000 | 15 |
1,500,000 and above | 17 |
09.
LTT for Non-Residential Property (Wales)
Consideration (£) | Rate (%) |
0 – 225,000 | 0 |
225,001 – 250,000 | 1 |
250,001 – 1,000,000 | 5 |
Over 1,000,000 | 6 |
Statutory Pay
01.
Statutory Sick Pay (SSP)
Type | Max Payment Period | Amount (£) |
Statutory Sick Pay (SSP) | Up to 28 weeks | 116.75 (2024/25) |
109.40 (2023/24) |
Note: Statutory Sick Pay is payable for employees who are too ill to work.
02.
Statutory Maternity Pay (SMP)
Type | Max Payment Period | Amount (£) |
Statutory Maternity Pay | First 6 weeks | 90% of weekly earnings |
Next 33 weeks | 184.03 (2024/25) | |
172.48 (2023/24) |
Note: Statutory Maternity Pay is for employees taking time off to have a baby, payable for up to 39 weeks.
03.
Statutory Paternity Pay (SPP)
Type | Max Payment Period | Amount (£) |
Statutory Paternity Pay | 2 weeks | 184.03 (2024/25) |
172.48 (2023/24) |
Note: Statutory Paternity Pay is for employees taking time off during their partner’s Statutory Maternity Pay period.
04.
Shared Parental Pay (ShPP)
Type | Max Payment Period | Amount (£) |
Shared Parental Pay | Up to 37 weeks | 184.03 (2024/25) |
172.48 (2023/24) |
Note: Shared Parental Pay is for employees taking time off following the curtailment of the period of SMP by the mother.
05.
Statutory Adoption Pay (SAP)
Type | Max Payment Period | Amount (£) |
Statutory Adoption Pay | First 6 weeks | 90% of weekly earnings |
Next 33 weeks | 184.03 (2024/25) | |
172.48 (2023/24) |
Note: Statutory Adoption Pay is for employees taking time off when adopting a child, payable for up to 39 weeks.
06.
Statutory Parental Bereavement Pay
Type | Max Payment Period | Amount (£) |
Statutory Parental Bereavement Pay | 2 weeks | 184.03 (2024/25) |
172.48 (2023/24) |
Note: Statutory Parental Bereavement Pay is for parents taking time off following the death of a child or a stillbirth, payable for up to 2 weeks.
07.
Payment Conditions and Eligibility
- Employees must have average weekly earnings at or above the Lower Earnings Limit to qualify for statutory payments.
- In some cases, statutory payments may be paid at 90% of weekly earnings (where this is lower than the standard rate).
Tax Relief for Individual
01.
Enterprise Investment Scheme (EIS)
Type | Details |
Maximum Investment | £1,000,000 per annum; £2,000,000 for knowledge-intensive companies |
Income Tax Relief | 30% of the investment value |
Capital Gains Tax (CGT) Relief | Exempt on disposal if held for 3 years |
Deferral of CGT | Capital gains from other assets may be deferred if invested in EIS |
Note: The EIS helps individuals invest in new, unquoted trading companies, providing significant tax reliefs to encourage investment.
02.
Seed Enterprise Investment Scheme (SEIS)
Type | Details |
Maximum Investment | £200,000 per annum (subject to Parliamentary approval) |
Income Tax Relief | 50% of the investment value |
CGT Relief | Exempt on disposal if held for 3 years |
Capital Gains Exemption | Capital gains up to £100,000 may be exempt if invested in SEIS |
Note: SEIS is a junior version of the EIS, targeting investment in very early-stage companies.
03.
Social Investment Relief (SIR)
Type | Details |
Availability | Closed to new investments from 6 April 2023 |
Note: SIR encouraged investments in social enterprises, but no new investments can be made as of 6 April 2023.
04.
Venture Capital Trusts (VCTs)
Type | Details |
Maximum Investment | £200,000 per annum |
Income Tax Relief | 30% of the investment value |
Dividend Income | Exempt from tax |
Capital Gains Relief | Exempt on disposal |
Note: VCTs provide investment opportunities in smaller high-risk unquoted companies through a mediated fund.
Value Added Tax (VAT)
01.
VAT Registration Thresholds
VAT Limit | Amount (£) | Period |
Annual Registration Limit | £90,000 | 1 April 2024 to 31 March 2025 |
Annual Deregistration Limit | £88,000 | 1 April 2024 to 31 March 2025 |
02.
Vat Rates
VAT Rate | Rate (%) | Applies To |
Standard Rate | 20% | Most goods and services |
Reduced Rate | 5% | Certain goods and services (e.g., home energy) |
Zero Rate | 0% | Most food, children’s clothes, etc. |
Vehicles
01.
Car Benefit Calculation
CO2 Emissions (g/km) | % of Car’s Price Taxed |
0 | 2 |
1-50: Electric range >130 | 2 |
1-50: Electric range 70-129 | 5 |
1-50: Electric range 40-69 | 8 |
1-50: Electric range 30-39 | 12 |
1-50: Electric range <30 | 14 |
51-54 | 15 |
55-59 | 16 |
60-64 | 17 |
65-69 | 18 |
70-74 | 19 |
75-79 | 20 |
80-84 | 21 |
85-89 | 22 |
90-94 | 23 |
95-99 | 24 |
100-104 | 25 |
105-109 | 26 |
110-114 | 27 |
115-119 | 28 |
120-124 | 29 |
125-129 | 30 |
130-134 | 31 |
135-139 | 32 |
140-144 | 33 |
145-149 | 34 |
150-154 | 35 |
155-159 | 36 |
160 and above | 37 |
02.
Car Fuel Benefit
Fuel Charge Multiplier | £ |
Fuel Charge Multiplier | £27,800 |
03.
Van Benefit
Type | Charge (£) |
Van Benefit | £3,960 |
Fuel Benefit | £757 |
04.
Advisory Fuel Rates for Company Cars (From 1 September 2024)
Petrol
Engine Size (cc) | Pence per Mile |
1400 or less | 13 |
1401 to 2000 | 15 |
Over 2000 | 24 |
Diesel
Engine Size (cc) | Pence per Mile |
1600 or less | 12 |
1601 to 2000 | 14 |
Over 2000 | 18 |
LPG
Engine Size (cc) | Pence per Mile |
1400 or less | 11 |
1401 to 2000 | 13 |
Over 2000 | 21 |
Fully Electric Cars
Fuel Type | Pence per Mile |
Electricity | 7 |
05.
Mileage Allowance Payments (MAPs) for Employees (2024/25 and 2023/24)
Vehicle Type | Pence per Mile | Up to 10,000 Miles | Over 10,000 Miles |
Cars and Vans | 45 | 45 | 25 |
Bicycles | 20 | 20 | – |
Motorcycles | 24 | 24 | – |
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