In this blog we prepared a summary about the changes for the 2024/25 Tax Year.
The National Minimum Wage will increase from the 1st April 2024 as follows:
| Category of worker | Hourly rate |
| Aged 21 and above (national living wage rate) | £11.44 |
| Aged 18 to 20 inclusive | £8.60 |
| Aged under 18 (but above compulsory school leaving age) | £6.40 |
Tax thresholds, rates and codes
The standard employee personal allowance for the 2024 to 2025 tax year is:
- £242 per week
- £1,048 per month
- £12,570 per year
Above that limit, the Tax Rates are as follows:
England, Wales and Northern Ireland
| Basic tax rate | 20% | Up to £37,700 |
| Higher tax rate | 40% | From £37,701 to £125,140 |
| Additional tax rate | 45% | Above £125,140 |
Scotland
| PAYE tax rate | Rate of tax | Annual earnings the rate applies to (above the PAYE threshold) |
| Personal allowance | 0% | Up to £12,570 |
| Starter tax rate | 19% | From £12,571 to £14,876 |
| Basic tax rate | 20% | From £ 14,877 to £26,561 |
| Intermediate tax rate | 21% | From £26,562 to £43,662 |
| Higher tax rate | 42% | From £43,663 to £75,000 |
| Advanced tax rate | 45% | From £75,001 to £125,140 |
| Top tax rate | 48% | Above £125,140 |
Class 1 National Insurance thresholds
| Employee NI Contribution | 0% | Up to £1,048 per month |
| 8% | From £1,049 to £4,189 per month | |
| 2% | Above £4,189 per month |
| Employer NI Contribution | 0% | Up to £758 per month |
| 13.8% | From £758 per month |
Employment Allowance
Employment Allowance allows employers to reduce their annual National Insurance liability by up to the annual allowance amount if the total employers’ Class 1 National Insurance liabilities is less than £100,000 and there are at least one more Employee or paid Director on payroll apart from the sole Director.
| Allowance | 2024 to 2025 rate |
| Employment Allowance | £5,000 |
Self-employed: Class 2 National Insurance
Class 2 contributions are how the self-employed build up entitlement to the state pension. For 2024/25, Class 2 contributions are payable voluntarily at £3.45 per week where profits are below £6,725 per year.
Where profits exceed £6,725 per year the Class 2 contributions are automatically added and are not payable anymore.
Self-employed: Class 4 National Insurance
The self-employed also pay Class 4 contributions on their profits. These contributions do not secure any benefit entitlement and are more akin to a tax.
For 2024/25, Class 4 contributions are payable at the main rate of 6% where profits are between £12,570 and £50,270, and at the additional Class 4 rate of 2% on profits above £50,270 per year.
Both the Class 2 and Class 4 National Insurance are payable once in the year with the annual tax liability included in the Self Assessment Tax Return for 2024/25.
The dividend tax rates in 2024/25
This year the dividend tax rates are:
- 0% on the first £500 from dividends (this is called the Dividend Allowance)
- 0% if your total income is under the Personal Allowance (£12,570)
- 8.75% if you’re a basic rate taxpayer (up to £50,270 combined income)
- 33.75% if you’re a higher rate taxpayer (only for the part goes over the £50,270 limit)
- 39.35% if you’re an additional rate taxpayer (above £125,140 – at this point you also lose your Personal Allowance as the income is over £100,000)
VAT registration threshold
You must register to VAT if:
- your total VAT taxable turnover for the last 12 months was over £90,000 (the VAT threshold)
- you expect your turnover to go over £90,000 in the next 30 days
