Personal Tax Allowances for the 2024/25 Tax Year: A Comprehensive Guide for UK Taxpayers

personal tax allowance for 2024/25

Understanding your personal tax allowance is crucial for accurate tax calculation in the UK. This allowance represents the portion of your annual income exempt from income tax. Here’s a comprehensive overview of the personal tax allowance for the 2024/25 tax year, along with factors that can influence it, the income tax bands that apply, and when seeking professional help from an accountant might be beneficial.

The Standard Personal Tax Allowance and Eligibility

The standard personal tax allowance for the 2024/25 tax year is £12,570. This signifies that any income up to this amount is not subject to income tax. It’s important to note that eligibility for the standard allowance is universal for UK residents with income above a certain threshold. However, there are situations where you might be entitled to additional allowances on top of the standard amount.

Reflecting the Personal Tax Allowance in Your Tax Code

Your tax code, a combination of letters and numbers, instructs your employer on the amount of income tax to deduct from your salary. If you qualify for the standard personal allowance and have no other adjustments, your tax code will likely be 1257L (12570L for Scotland). This code essentially tells your employer to deduct tax only on income exceeding your £12,570 allowance.

More info about the 1257L tax code

Beyond the Standard Allowance: Additional Factors to Consider

Several situations can affect your personal tax allowance:

  • Marriage Allowance: Married couples and civil partners can claim the marriage allowance. This enables the transfer of a portion of an unused allowance from a higher-earning spouse to a lower-earning one, potentially reducing their combined tax liability.
  • Blind Person’s Allowance: If you are registered blind, you may be entitled to an additional allowance on top of the standard amount. This allowance recognises the additional costs visually impaired individuals may face.
  • Income Exceeding £100,000: The personal allowance is gradually reduced for individuals with income exceeding £100,000. It disappears entirely at £125,140. This ensures higher earners contribute a greater share of income tax.

Understanding Income Tax Bands and Rates for the 2024/25 Tax Year

Your income tax liability is determined by different tax bands. Once your income surpasses the tax-free allowance, you’ll be subject to income tax at the following rates for the 2024/25 tax year:

  • Basic rate: 20% (applicable to income between £12,571 and £50,270)
  • Higher rate: 40% (applicable to income between £50,271 and £150,000)
  • Additional rate: 45% (applicable to income exceeding £150,000)

Here you can quickly calculate how much tax you need to pay on your income.

National Insurance Rate for the 2024/25 Tax Year

National Insurance (NI) is a separate system contributing to social security benefits. It’s important to distinguish NI from income tax. The standard employee NI rate for 2024/25 is 12% on earnings between £190 and £967 per week (£823 to £4,188 per month).

Navigating the Complexities: When to Seek Professional Help from an Accountant

The UK tax system can be intricate, particularly for individuals with non-standard income situations. Consider seeking assistance from a qualified accountant if you encounter any of the following:

  • Self-employment or running your own business: Tax implications for self-employed individuals can be more complex. An accountant can ensure you claim all relevant deductions and reliefs, such as expenses for equipment or travel related to your business.
  • Significant investments or rental income: Taxes on investment income or rental income can differ from income from employment. An accountant can advise on maximising tax efficiency in these areas, considering factors like capital gains tax and allowable deductions for property maintenance.
  • Uncertainty regarding claiming tax reliefs or allowances: There are various tax reliefs and allowances available depending on your circumstances, such as gift aid or pension contributions. An accountant can help you navigate these complexities and ensure you claim everything you’re entitled to.
  • Complex financial situation: If you have a significant amount of savings, or investments, or are approaching retirement, an accountant can help you plan your tax strategy for the 

Conclusion

For expert guidance on navigating your personal tax allowance and other tax matters, contact TaxAce LTD Accountants. Our team of qualified professionals can help you understand your tax obligations, ensure you claim all applicable allowances and reliefs, and minimise your tax burden.

Contabila UK - Founder and CEO -TaxAce - Iurie Bivol

Iurie Bivol

Director TAXACE LTD

Entrepreneur and accountant with 15 years of experience in the UK.

Contabilitate UK - Senior Tax Assistant - Alina Costreie

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