We have entered the final month of the 2024/25 tax year, so we’ve summarised what tax allowances are available this year to ensure you still have time to take action if you’d like to benefit from any of them.

 Personal Allowance

 In the 2024/25 tax year, every individual working in the UK is entitled to £12,570 of tax-free income, provided their total income is below £100,000. This applies to sole traders and both employees and company directors working in their own companies. The £12,570 allowance can only be used at a primary job – any secondary employment will be taxed at the regular 20-40% rates.

This allowance is particularly important for those who own their own companies but are not yet

taking a salary through payroll. If your company has profits but you have not yet set up a director’s salary, please let us know as soon as possible so we can assist with the payroll setup for your annual director’s salary. It’s not enough to simply transfer the money to yourself – a formal payroll declaration must also be submitted to HMRC.

Marriage Allowance

If one spouse earns less than £12,570, they can transfer £1,260 of their tax-free allowance to their partner. The receiving partner must be in the 20% basic rate tax band. This can save the married couple up to £252 per year.

Savings Allowance

Interest income earned from savings is tax-free up to £1,000 for those in the 20% basic rate tax

band. For higher-rate taxpayers (40%), this tax-free interest allowance is £500. For additional-rate taxpayers (45%), there is no tax-free savings allowance.

Dividend Allowance

Company or share owners can receive up to £500 in dividends tax-free in the 2024/25 tax year. Any dividend income above this threshold is taxed at 8.75% for basic rate taxpayers and 33.75% for higher rate taxpayers (above £50,270).

Capital Gains Allowance

If you sell an asset and make a profit, the first £3,000 of capital gains is tax-free in the 2024/25 tax year. Any gains above that are taxed at 18% in the basic rate band and 24% in the higher rate band.

Taxable items can include valuable furniture, artworks, or  property sales (excluding your primary residence). Profits from cryptocurrency or stock sales are also subject to this tax.

Savings and Investment Limits

You can shield a portion of your savings and investments from tax each year through ISA savings accounts and pension contributions. However, there are annual contribution limits for tax-free benefits:

– ISA Savings Account: £20,000

– Junior ISA Account: £9,000

– Child Trust Fund (CTF) for children: Although the CTF scheme closed in 2011, those with existing accounts can still contribute up to £9,000 this year.

– Private Pensions: You can contribute up to 100% of your annual income, capped at £60,000,

across any number of private pension schemes. This annual limit includes personal contributions, employer contributions, and the tax relief added by the government. These pensions will only become taxable once withdrawn in retirement.

Please contact us if you need any further help before the end of the tax year, which closes on the 5th of April 2025.