Tax in the UK can feel complicated – different rates, thresholds, and allowances apply depending on where you live, how you earn, and whether you’re employed, self-employed, or run a company. At Adena Accountancy, we make it easier. Here’s our guide to the key tax rates, allowances, and changes for the 2024/25 and 2025/26 tax years – and what they mean for you.

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Personal Allowance

The Personal Allowance is the amount of income you can earn before you start paying Income Tax.

 

• • 2024/25 and 2025/26 → £12,570

• • Reduced once income exceeds £100,000 (lost completely at £125,140)

• • Can be increased if you qualify for Marriage Allowance or Blind Person’s Allowance

What this means for you

 

• • Employees: automatically applied via PAYE.

• • Self-employed: applied when HMRC calculates your Self Assessment.

• • Company directors: usually managed through payroll software – we help our clients optimise salary/dividend combinations to make the most of allowances.

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Key Personal Allowances

Allowance	2025/26	2024/25	Notes
Personal Allowance	£12,570	£12,570	Reduced after £100,000 income
Marriage Allowance transfer	£1,260	£1,260	If one spouse earns below PA
Blind Person’s Allowance	£3,130	£3,070	Transferable if unused
Trading Allowance	£1,000	£1,000	For small sole trader income
Property Allowance	£1,000	£1,000	For small rental income

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Income Tax Rates

England, Wales & Northern Ireland

Tax Band	Tax Rate	Income Range (2024/25 & 2025/26)
Basic rate	20%	£12,571 – £50,270
Higher rate	40%	£50,271 – £125,140
Additional rate	45%	Over £125,140

Scotland

Scotland sets its own rates:

Band	Rate	2025/26 Thresholds	2024/25 Thresholds
Starter	19%	£12,571 – £15,397	£12,571 – £14,876
Basic	20%	£15,398 – £27,491	£14,877 – £26,561
Intermediate	21%	£27,492 – £43,662	£26,562 – £43,662
Higher	42%	£43,663 – £75,000	£43,663 – £75,000
Advanced	45%	£75,001 – £125,140	£75,001 – £125,140
Top	48%	Over £125,140	Over £125,140

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Dividend Tax

Taxpayer Type	Rate	Allowance
Basic rate	8.75%	£500 tax-free dividend allowance
Higher rate	33.75%
Additional rate	39.35%

Why it matters: Many limited company directors use a mix of salary and dividends to keep tax efficient. We help structure this correctly.

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National Insurance Contributions (NICs)

Employees (Class 1)

Threshold	2025/26	2024/25
Lower Earnings Limit	£6,500	£6,396
Primary Threshold	£12,570	£12,570
Upper Earnings Limit	£50,270	£50,270
NIC Rates	8% (to UEL), 2% (above UEL)	8% (to UEL), 2% (above UEL)

Employers

 

• • 2025/26: NICs at 15% above £5,000

• • 2024/25: NICs at 13.8% above £9,100

Self-employed (Class 2 & 4)

 

• • Class 2 NICs abolished (£0 per week from 2024/25 onwards)

• • Class 4 NICs: 6% between £12,570 – £50,270, then 2% above

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Capital Gains Tax (CGT)

Taxpayer	Gains from Property	Gains from Other Assets	Annual Exemption
Basic rate	18%	10% (18% from Oct 2024)	£3,000
Higher rate	28%	20% (24% from Oct 2024)	£3,000

Tip: Business Asset Disposal Relief can reduce CGT to 10% (lifetime limit £1m).

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Company Taxes

 

• • Corporation Tax: 19%–25% depending on profits (both years)

• • VAT Registration Threshold: £90,000 (both years)

• • VAT Deregistration Threshold: £88,000 (both years)

Mileage allowances:

 

• • Car/van: 45p (first 10,000 miles), 25p (after)

• • Motorcycle: 24p | Bicycle: 20p

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What this means for you

Tax planning can make a huge difference:

 

• • Sole traders → Use trading allowance if income is small; consider incorporation when profits rise.

• • Company directors → Optimise salary + dividends, and claim all allowable expenses.

• • Employers → NIC increases mean payroll planning is more important than ever.

At Adena Accountancy, we’ll make sure you don’t miss allowances, and help you structure your business in the most tax-efficient way.

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Need help with tax planning?

Get in touch with our superhero accountants today – we’ll keep your taxes sorted, stress-free, and as efficient as possible.

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