While the majority of the 2024/25 tax rates were released in the autumn statement, the Chancellor Jeremy Hunt announced some further changes during the Spring Budget in March 2024.

As a business owner and employer, it’s important that you keep up to date with the tax rates for 2024/25 and any tax rates changing on 6 April 2024. In this blog we cover the main 2024 tax changes and the headline tax rates across a wide range of areas.

For more detailed tax rates information, download our 2024/25 tax rates tables here.

Budget 2024 summary

The main headlines and changes from the Spring Budget 2024 were as follows:

• High income child benefit charge (HICBC): This unpopular tax charge will undergo a two-stage reform. Firstly, in 2024/25, the income threshold rises in 2024/25 with a £10,000 increase from £50,000 to £60,000 with a halving of the rate of charge. As a result, the full 100% HICBC charge will apply once individual income exceeds £80,000. Secondly, by April 2026, the income threshold will be switched from an individual basis to a household basis.
• National insurance contributions (NICs): From 6 April 2024, the main rates of employee (class 1) and self-employed (class 4) NICs will be cut by two percentage points to 8% and 6% respectively, doubling down on the cuts announced in last November’s Autumn Statement. The maximum annual saving is £754.
• Residential property: In 2024/25, the maximum capital gains tax rate on residential property gains will fall to 24%. The lowered rate may encourage more buy-to-let investors to sell up rather than pay higher mortgage rates at the end of their fixed-rate deals. It may have a similar impact on holiday cottage owners, as the favourable tax rules for furnished holiday lets will be scrapped from April 2025.
• UK ISA: The Chancellor issued a consultation paper on a new ‘UK ISA’. This will have a contribution limit of £5,000 – in addition to the existing overall £20,000 ISA limit (unchanged since 2017/18). However, investments will have to be primarily in the UK, probably both shares and bonds. There was no specific timeline on the proposal.

The Government also stuck with their policy of freezing tax-free allowances for coming years in areas such as income tax, IHT etc.

Tax Year 2024/25 tax rates and thresholds

Income tax rates and thresholds

The annual tax-free Personal Allowance has been frozen for 2024/25 at £12,570, meaning your first £12,570 of income will be tax-free.

Income tax in England, Wales, and Northern Ireland

Tax band                                        Tax rate                           Taxable income threshold

Personal allowance                  0%                                      Up to £12,570

Basic rate                                      20%                                    £12,571 to £50,270

Higher rate                                    40%                                    £50,271 to £125,140

Additional rate                            45%                                    Over £125,140

Main personal allowances and reliefs                     2024/25

Personal allowance*                                                            £12,570

Marriage/civil partners’ transferable allowance    £1,260

Married couple’s/civil partners’ allowance at 10%†

(if at least one born before 6/4/35) – maximum     £11,080

– minimum      £4,280

Blind person’s allowance                                                   £3,070

Rent-a-room relief                                                                 £7,500

Property allowance and trading allowance (each) £1,000

*If you earn more than £100,000 in the tax year, your Personal Allowance will be reduced by £1 for every £2 that you earn above that amount.

†Married couple’s/civil partners’ allowance reduced by £1 for every £2 of adjusted net income over £37,000 (£34,600 for 23/24) until minimum reached

For Scottish tax rates and thresholds download our tax rates guide here.

Dividend allowance changes

The dividend allowance for 2024/25 has been cut from £1,000 to £500. Above this amount, dividends you receive from your limited company will attract the following tax rates, based on whichever income tax band you fall into:

• 8.75% (basic rate) – income from £13,070 up to £50,270
• 33.75% (higher rate) – income from £50,271 up to £125,140
• 39.35% (additional rate) – income above £125,140

National insurance contributions

On 6 January 2024, the main rate of employee (‘primary’) Class 1 National Insurance contributions (NIC) was cut by 2%, from 12% to 10%.

In the Spring Budget 2024, this was further reduced to 8% from 6 April 2024.

The table below shows the Class 1 National Insurance thresholds and rates that will apply to employees and employers in the UK for the 2024/25 tax year.

Class 1 National Insurance thresholds and rates 2024/25

*No employer NICs on the first £967 pw for employees generally under 21 years, apprentices under 25 years and veterans in first 12 months of civilian employment. No employer NICs on the first £481 pw for employees at freeports and investment zones in Great Britain in the first three years of employment.

Employment allowance –    £5,000

Per business – not available if sole employee is a director or employer’s NICs for 23/24 are £100,000 or more

Pensions

Following the abolition of the pension lifetime allowance, there are two new allowances, these are:

• the lump sum and death benefit allowance which is £1,073,100
• the lump sum allowance which is £268,275.

The annual allowance remains at £60,000 per year (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).

The State Pension is set to increase by 8.5% in April 2024.

High income child benefit charge threshold

The high income child benefit charge threshold will increase to £60,000 and will not be fully withdrawn until an individual’s income reaches £80,000.

High Income Child Benefit Charge: 1% of benefit per £200 (£100 23/24) of adjusted net income between £60,000–£80,000 (£50,000–£60,000 23/24).

ISA limits frozen

In the March 2024 Budget, the Chancellor announced reforms of the ISA system to encourage more people to invest in UK assets. After a consultation on its implementation, the introduction of a new British ISA which will allow an additional £5000 annual investment on top of the existing ISA allowance for investments in UK equity.

Personal savings allowance and savings income

The Spring Budget saw the announcement of the introduction of a new British savings bond delivered through National Savings and investment, offering savers a guaranteed rate fixed for three years.

Most people can earn some interest from their savings without paying tax. You may get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings. The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.

Your allowances for earning interest before you have to pay tax on it include:

• your Personal Allowance
• starting rate for savings
• Personal Savings Allowance

You get these allowances each tax year. How much you get depends on your other income. The tax year runs from 6 April to 5 April the following year.

You can use your Personal Allowance to earn interest tax-free if you have not used it up on your wages, pension or other income.

Capital gains tax allowances

The capital gains tax exempt amount is reduced from £6,000 to £3,000 for 2024/25.

The higher rate of capital gains tax (CGT) for residential property disposals, will be cut from 28% to 24% from 6 April 2024.

Last year’s Spring Budget saw the government introduce full expensing from April 2023 to the end of March 2026. Full expensing allows companies to claim 100% capital allowances first-year relief on qualifying plant and machinery investments.

Business Asset Disposal Relief

10% on lifetime limit of £1,000,000 for gains on disposals of qualifying assets (which may include, for example, certain interests in trading businesses and shares in limited companies  with minimum 5% participation) held for at least 2 years.

Corporation tax rates and thresholds

Year to 31/3/25 and 31/3/24            

Corporation tax rates and thresholds

VAT registration threshold

The Spring statement saw an announcement on the VAT threshold. From April 1st 2024 the VAT registration threshold is £90,000 and the deregistration threshold is £88,000.

Property tax rates and thresholds

Stamp duty land tax

England & N Ireland – Stamp Duty Land Tax (SDLT) on slices of value to 31/3/25

Residential property              %                                         Commercial property†                        %

Up to £250,000                           0%                                      Up to £150,000                                         0%

£250,001–£925,000                 5%                                      £150,001–£250,000                                2%

£925,001–£1,500,000             10%                                    Over £250,000                                           5%

Over £1,500,000                        12%

First time buyers: 0% on first £425,000 for properties up to £625,000

Non-resident purchasers: 2% surcharge on properties £40,000 or more

Residential properties bought by companies etc over £500,000: 15% of total consideration, subject to certain exemptions

Multiple Dwellings Relief

There was also an announcement in the Spring Budget 2024 on stamp duty relief known as Multiple Dwellings Relief for people who purchase more than one dwelling in a single transaction. The Chancellor announced the abolition of this relief.

Abolition of the Furnished Holiday Lettings (FHL) tax regime

The Chancellor announced in the 2024 Budget, the abolition of the furnished holiday lettings regime from 6 April 2025.

Summary

For more detailed information about the 2024/25 tax rates, download our tax rates guide here.

If you have any questions about how the new tax rates from 6 April will affect you, as well as measures from the Spring Budget, please get in touch.