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Learn about the tax threshold 2024 UK in this guide, from your primary taxes to others you may deal with at some point. We cover the latest tax rates and allowances as well as reliefs you might be eligible for.
Quick Introduction to UK Taxes
Whether employed or self-employed, you mainly pay these two direct taxes: income tax and National Insurance (NI). Businesses registered with Companies House, on the other hand, pay corporation tax (and NI). Indirect taxes include Value Added Tax (VAT), vehicle excise tax, and more.
The tax threshold 2024 self employed, including rates, is the same as with the employed—the only difference is how tax is paid. If you earn solely from employment, your taxes are already taken care of from the source through Pay as You Earn (PAYE). Most people in the UK do not usually have to file a tax return as their taxes are already deducted from their payroll.
However, if you have income aside from your job (e.g., rental income, dividend payouts, etc.) or are fully fledged self-employed, you will need to register for self-employment first, then file self-assessments to report to HMRC and pay tax on these incomes.
Beware of Double Taxation: If you are a dual citizen or earn from another country, be sure to check if the other country has double taxation agreements with the UK so you do not have to pay taxes twice. See our List of Countries on Treaty here.
Tax Threshold 2024/25 and Rates
Thresholds refer to the tax-free amount that you can earn (or own) before you are liable for tax. For the 2024/25 tax year, here are the thresholds and rates:
Income Tax
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You can earn up to £12,570 without paying income tax. This is your Personal Tax Allowance for the current year. Above that, any taxable income will fall under income tax rates and brackets below:
- Basic Rate: 20% on £12,571 to £50,270
- Higher Rate: 40% on £50,271 to £125,140
- Additional Rate: 45% over £125,141
Useful read: Why Am I Not Paying Tax on My Wages UK?
National Insurance
If you are employed, you only pay Class 1 National Insurance. That is when you earn over £242 per week. If you are self-employed, you pay Class 2 NI (optional) and Class 4 NI (mandatory) when you earn £6,725 and £12,570 in a year, respectively.
Employer’s NI Hike: The recent Autumn Budget revealed a significant increase in National Insurance contributions beginning 6 April 2025—from 13.8% to 15%. The threshold will also lower to £5,000 from £9,100. The Office for Budget Responsibility (OBR) forecasts that whilst it looks like the increase is on employers, employees will be burdened more by 60% in final salary.
See relevant article: When Do I Start Paying Tax UK? [2024/25]
Corporation Tax
Corporations do not have a starting tax-free threshold, with rates based on how much they earn:
- Small Profits Rate: 19% on profits under £50,000 (lower limit)
- Main Rate: 25% on profits above £250,000 (upper limit)
- Marginal Relief Fraction: 3/200 on profits between the lower and upper limit
For more information, read Corporation Tax Rates UK 2024/25 and Special Regimes.
Useful read: Do You Pay Corporation Tax on Dividends?
Value Added Tax
Corporations do not have a starting tax-free threshold, with rates based on how much they earn:
- Small Profits Rate: 19% on profits under £50,000 (lower limit)
- Main Rate: 25% on profits above £250,000 (upper limit)
- Marginal Relief Fraction: 3/200 on profits between the lower and upper limit
For more information, read Corporation Tax Rates UK 2024/25 and Special Regimes.
Useful read: Do You Pay Corporation Tax on Dividends?
Capital Gains Tax
You can earn up to £3,000 (annual exemption allowance 2024/25) before becoming liable for capital gains tax. Your tax liability depends on which tax bracket you fall into, the type of assets you sold, and when you sold them. CGT rates are currently as follows:
- Basic Rate: 18%
- Higher and Additional Rate: 24%
Read more: How Much Can You Earn Before Paying Tax in the UK?
Stamp Duty
Stamp duty varies according to region. Here are the regular thresholds:
| UK Region | Stamp Duty | Threshold |
|---|---|---|
|
England and Northern Ireland |
Stamp Duty Land Tax (SDLT) |
£250,000 |
|
Scotland |
Land and Buildings Transaction Tax (LBTT) |
£145,000 |
|
Wales |
Land Transaction Tax (LTT) |
£225,000 |
Note that first-time buyers have different and higher thresholds. For more details, check out Stamp Duty Land Tax Rates 2024/25: A Quick Guide.
Inheritance Tax
The inheritance tax threshold remains at £325,000 and at the usual standard rate of 40%, the threshold being expected to change by April 2030. Read our Inheritance Tax guide for more information.
Trivia: Here are some indirect taxes in the UK may want to know a bit:
Vehicle Excise Duty. A flat tax imposed on most automobiles, set at £190 annually after the first registration year.
Air Passenger Duty. Affects nearly all travelers departing from UK airports, with charges ranging from £7 to £224 depending on destination and travel class.
Transferrable Marriage Allowance
If you are married or in a civil partnership, you might want to explore the Marriage Allowance to save on taxes. If one of you earns less than the Personal Allowance of £12,570, you can transfer £1,260 of that allowance to the higher-earning spouse. This could save you up to £252 in taxes, especially if the higher earner is within the basic income tax band.
This transfer works as a tax credit for the higher earner, reducing their overall tax bill. Just make sure the partner transferring the allowance keeps their income below £11,310 after the transfer to avoid any tax.
Extra Couple Tip: Consider splitting dividends from shared investments, too, to maximise your tax efficiency as a couple. Further read: How to Claim Marriage Allowance UK | For Married & Civil Partners [Latest].
Other Allowances & Tax Reliefs
Be sure to use up these allowances:
- Savings Interest Allowance: £1,000 / £500
- Trading Income Allowance: £1,000
- Dividend Income Allowance: £500
Reliefs and tax-efficient strategies also come in the following forms. See if any applies:
- Blind Person’s Allowance
- Employment Allowance (reduces eligible employers’ NICs)
- Tax Relief on Professional Fees and Subscriptions (for self-employed or working from home)
- Private Residence Relief (CGT exemption on the sale of your main home)
- Annual Investment Allowance (AIA) (writes off the full cost of qualifying capital investment against company tax, up to £1 million)
- R&D Tax Credits (for companies investing in innovation, allowing them to reclaim a percentage of their expenditure)
- VAT Flat Rate Scheme (reduces companies’ administrative burdens whilst enabling them to keep a percentage of the VAT they collect as income)
- First-Time Buyer Relief (increased stamp duty threshold to £425,000)
- Annual Gifting Exemptions (£3,000 for 2024/25)
- IHT Combined Allowances in Couples (doubles the IHT allowance to £650,000)
For more information, read our Tax Saving Tips UK | Quick Tax-Efficient Options [2024].
Disclaimer: Any tax strategy should be consulted with a tax advisor first to ensure you are legally compliant and maximising opportunities.
FAQs on UK Taxation
Married couples or civil partners can transfer allowances to one another, up to £1,260. To save on inheritance tax, they can also combine their lifetime allowances, up to £650,000.
Yes, termination payments are taxable in the UK. You will pay tax and National Insurance on the portion equivalent to what you would have earned if you were still working, including payments in lieu of notice (PILON) and during gardening leave.
If you leave the UK and are considered non-resident, you will not pay UK tax on income or gains earned outside the UK. However, you may still owe UK tax on any income sourced from the UK even whilst non-resident.
Also known as Additional State Pension, State Earnings-Related Pension Scheme (SERPS), or State Second Pension, this is the additional amount you can get on top of your regular state pension. This applies to you if you are a man born before 6 April 1951 or a woman born before 6 April 1953.
Get Expert Tax Advice
Knowing the tax threshold 2024 is just one of the steps toward proactive tax management. If you need personalised guidance, consult with tax professionals. Legend Financial is your tax ally. We have been helping individuals and businesses for over twelve years stay on top of their tax and finances. Talk to one of our tax accountants today!
