{"id":158366,"date":"2024-04-09T12:04:35","date_gmt":"2024-04-09T11:04:35","guid":{"rendered":"https:\/\/startups.co.uk\/?p=158366"},"modified":"2024-06-11T11:56:33","modified_gmt":"2024-06-11T10:56:33","slug":"uk-tax-brackets","status":"publish","type":"post","link":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/","title":{"rendered":"UK tax brackets 2024\/25: rates and personal allowances"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][vc_column_text]The saying goes that nothing in life is certain except death and taxes. But anyone who <a href=\"https:\/\/startups.co.uk\/people\/payroll\/how-to-pay-employees\/\">pays employees<\/a> and has wrestled with the UK tax code will tell you that &ldquo;certain&rdquo; is a far cry from how they&rsquo;d describe it.<\/p>\n<p>Income tax rates have been frozen since 2021 in England, Northern Ireland, and Wales, but the UK tax structure has many layers that can impact the taxman&rsquo;s overall bill. That includes new <a href=\"https:\/\/startups.co.uk\/people\/payroll\/national-insurance-rates\/\">National Insurance rates<\/a>, which threw many business owners for a loop earlier this year.<\/p>\n<p>This up-to-date guide will provide you with a breakdown of the current tax brackets for UK employees and sole traders. We&rsquo;ll also explain where your bill might go up this year; and how to keep it down while remaining legally compliant with HMRC.[\/vc_column_text]<\/p><div class=\"jumplinks-content\">\n <h3 class=\"jumplinks-content-title\">\n This article will cover: <\/h3>\n <ul class=\"jumplinks-content-list\">\n <li class=\"jumplinks-content-item\">\n <a class=\"jumplinks-content-link jumplink-anchor\" href=\"#link-income-tax-brackets-for-fy-2024-25\">Income Tax brackets for FY 2024\/25<\/a>\n <\/li>\n <li class=\"jumplinks-content-item\">\n <a class=\"jumplinks-content-link jumplink-anchor\" href=\"#link-personal-allowance\">Personal Allowance<\/a>\n <\/li>\n <li class=\"jumplinks-content-item\">\n <a class=\"jumplinks-content-link jumplink-anchor\" href=\"#link-tax-brackets-for-sole-traders-and-self-employed\">Tax brackets for sole traders and self-employed<\/a>\n <\/li>\n <\/ul>\n<\/div>\n[\/vc_column][\/vc_row][vc_row][vc_column]<div class=\"jumplink-anchor-section\">\n <div class=\"jumplink-anchor-pointer\" id=\"link-income-tax-brackets-for-fy-2024-25\"><\/div>\n<\/div>\n[vc_column_text]\n<h2>Income Tax brackets for FY 2024\/25<\/h2>\n<p>Income tax is a charge on earnings that&rsquo;s collected and managed by HMRC. It applies to all income sources, whether wages and salaries, profits from self-employment, or interest on savings.<\/p>\n<p>In the March <a href=\"https:\/\/startups.co.uk\/news\/spring-budget-business-reaction\/\">Spring Budget<\/a>, Chancellor Jeremy Hunt confirmed that the thresholds for basic rate and higher rate taxpayers in England, Wales, and Northern Ireland will remain frozen until &ldquo;at least&rdquo; 2028. For FY 2024\/25, the income tax rates are set at:<\/p>\n\n<table id=\"tablepress-1127\" class=\"tablepress tablepress-id-1127\">\n<thead>\n<tr class=\"row-1 odd\">\n\t<th class=\"column-1\">Band<\/th><th class=\"column-2\">Taxable income<\/th><th class=\"column-3\">Tax rate<\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-hover\">\n<tr class=\"row-2 even\">\n\t<td class=\"column-1\">Basic rate<\/td><td class=\"column-2\">&pound;12,571 to &pound;50,270<\/td><td class=\"column-3\">20%<\/td>\n<\/tr>\n<tr class=\"row-3 odd\">\n\t<td class=\"column-1\">Higher rate<\/td><td class=\"column-2\">&pound;50,271 to &pound;125,140<\/td><td class=\"column-3\">40%<\/td>\n<\/tr>\n<tr class=\"row-4 even\">\n\t<td class=\"column-1\">Additional rate<\/td><td class=\"column-2\">over &pound;125,140<\/td><td class=\"column-3\">45%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n<p>In the UK, we use a marginal rate of tax to calculate income tax bills. That means earners pay one rate of tax up to a set threshold, and then a higher percentage on each additional pound earned in the next threshold.<\/p>\n<p>Income tax is only payable on earnings above the personal allowance of &pound;12,570. Workers <strong>do not pay any tax<\/strong> if their take-home pay is below the personal allowance (more on this below).<\/p>\n<p><strong>Example: <\/strong><em>An employee earns an annual salary of &pound;53,400. Their monthly payslip will show:<\/em><\/p>\n<ul>\n<li><em>0% tax on earnings up to &pound;12,570&nbsp;<\/em><\/li>\n<li><em>20% tax on all earnings between &pound;12,571 and &pound;50,270<\/em><\/li>\n<li><em>40% tax on the remaining &pound;3,130<\/em><\/li>\n<\/ul>\n<h3>Income Tax brackets for Scotland<\/h3>\n<p>The Scottish Parliament sets its own income tax rates and bands, which means that Scottish taxpayers qualify for six income tax bands (although these are still collected by HMRC).<\/p>\n<p>Scottish earners have seen some big changes to their income tax brackets this spring. Most notably, the introduction of a new &ldquo;advanced&rdquo; rate tax band of 45%.<\/p>\n<p>According to <a href=\"https:\/\/www.gov.scot\/news\/income-tax-changes\/#:~:text=Progressive%20changes%20to%20Scottish%20income,%C2%A375%2C000%20and%20%C2%A3125%2C140.\" target=\"_blank\" rel=\"noopener noreferrer\">Deputy First Minister Shona Robison<\/a>, this advanced tax grade will raise valuable revenue for Scotland&rsquo;s public services. Since April 6, the new brackets are:<\/p>\n\n<table id=\"tablepress-1128\" class=\"tablepress tablepress-id-1128\">\n<thead>\n<tr class=\"row-1 odd\">\n\t<th class=\"column-1\">Band<\/th><th class=\"column-2\">Taxable income<\/th><th class=\"column-3\">Tax rate<\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-hover\">\n<tr class=\"row-2 even\">\n\t<td class=\"column-1\">Scottish starter rate<\/td><td class=\"column-2\">&pound;12,571 to &pound;14,876<\/td><td class=\"column-3\">19%<\/td>\n<\/tr>\n<tr class=\"row-3 odd\">\n\t<td class=\"column-1\">Scottish basic rate<\/td><td class=\"column-2\">&pound;14,877 to &pound;26,561<\/td><td class=\"column-3\">20%<\/td>\n<\/tr>\n<tr class=\"row-4 even\">\n\t<td class=\"column-1\">Scottish intermediate rate<\/td><td class=\"column-2\">&pound;14,877 to &pound;43,622<\/td><td class=\"column-3\">21%<\/td>\n<\/tr>\n<tr class=\"row-5 odd\">\n\t<td class=\"column-1\">Scottish higher rate<\/td><td class=\"column-2\">&pound;43,623 to &pound;75,000<\/td><td class=\"column-3\">42%<\/td>\n<\/tr>\n<tr class=\"row-6 even\">\n\t<td class=\"column-1\">Scottish additional rate<\/td><td class=\"column-2\">&pound;75,001 to &pound;125,140<\/td><td class=\"column-3\">45%<\/td>\n<\/tr>\n<tr class=\"row-7 odd\">\n\t<td class=\"column-1\">Scottish top rate<\/td><td class=\"column-2\">Over &pound;125,140<\/td><td class=\"column-3\">48%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n<h3>Tax freeze impact on UK earners<\/h3>\n<p>A &lsquo;tax freeze&rsquo; is often presented as a positive for Brits. But the Tories&rsquo; decision to fix income tax brackets actually has negative implications for earners in today&rsquo;s economy.<\/p>\n<p>Workplaces have seen record pay increases as rising inflation devalues the pound. Startups research shows that, on average, <a href=\"https:\/\/startups.co.uk\/news\/best-worst-jobs-for-pay-rise\/\">68.5% of firms<\/a> would raise employee salaries in 2024, and April&rsquo;s <a href=\"https:\/\/startups.co.uk\/people\/payroll\/national-living-wage\/\">National Living Wage rise<\/a> has forced many of the rest to do the same.<\/p>\n<p>If income tax thresholds are not raised to reflect this increase, then workers and <a href=\"https:\/\/startups.co.uk\/setting-up\/become-a-sole-trader\/\">sole traders <\/a>could find themselves qualifying for higher tax brackets even though their purchasing power hasn&rsquo;t increased. This is called fiscal drag.<\/p>\n<p>Given 2024 is an election year, some UK employers hope that income tax rates will rise if the Conservative party loses power. Labour, which is currently leading the polls, has said it would <em>not <\/em>raise income tax &ndash; although the pledge is yet to appear in a manifesto.[\/vc_column_text]\n <\/p><div class=\"highlight-box\">\n <div class=\"highlight-box-decor\">\n <svg class=\"brush-stroke-svg brush-stroke-big\" preserveaspectratio=\"none\" viewbox=\"0 0 116 6\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\">\n <g stroke=\"none\" stroke-width=\"1\" fill=\"#ea0037\">\n <path d=\"M94.0845406,5.55784045 C93.4629887,5.58758734 92.7723755,5.58758734 92.2198849,5.64708111 C92.0127009,5.66195455 91.7824965,5.67682799 91.5062512,5.66195455 C89.5955547,5.58758734 87.6618377,5.5727139 85.7511411,5.67682799 C85.5669776,5.69170144 85.2446914,5.67682799 84.9914666,5.67682799 C82.8275451,5.66195455 80.6866442,5.63220767 78.4997023,5.67682799 C76.0825561,5.72144832 73.5963485,5.64708111 71.271284,5.73632176 C69.3605874,5.81068898 67.5649931,5.76606865 65.7003374,5.76606865 C62.4084144,5.76606865 59.0934709,5.79581553 55.7785275,5.79581553 C55.6864457,5.79581553 55.5483231,5.79581553 55.4792618,5.79581553 C53.3153403,5.94454996 51.2895416,5.88505619 49.2637428,5.78094209 C48.7572931,5.75119521 48.7112522,5.81068898 48.4810478,5.84043586 C47.6753324,5.94454996 45.7416154,5.9594234 44.8668387,5.87018275 C44.1992459,5.79581553 43.5086327,5.79581553 42.8640603,5.87018275 C42.3115698,5.92967652 41.8972018,5.94454996 41.2986704,5.88505619 C40.9994046,5.8553093 40.5389958,5.8553093 40.1476483,5.88505619 C38.5362175,5.98917029 36.993848,6.03379061 35.4054376,5.88505619 C34.8299266,5.84043586 34.1393134,5.8553093 33.5407819,5.89992963 C32.8271482,5.94454996 32.1825759,5.92967652 31.3998809,5.91480307 C29.9726136,5.89992963 28.4993054,5.94454996 27.1641199,5.8553093 C27.0490177,5.84043586 26.7267315,5.88505619 26.4735066,5.88505619 C25.8289343,5.89992963 25.1383211,5.94454996 24.5167692,5.94454996 C20.3040286,5.91480307 16.0452471,6.03379061 11.8325064,5.94454996 C10.0599325,5.89992963 8.12621552,5.92967652 6.30760071,5.91480307 C4.2587815,5.88505619 2.57828934,5.78094209 1.54236952,5.58758734 C1.17404247,5.52809357 0.598531455,5.52809357 0,5.51322013 C0.920817623,5.39423259 2.09486009,5.37935914 3.26890256,5.34961226 C3.56816829,5.34961226 3.89045446,5.34961226 4.18972018,5.33473882 C4.48898591,5.33473882 4.8803334,5.31986537 4.90335384,5.29011849 C4.92637428,5.24549816 4.55804723,5.24549816 4.2587815,5.23062472 C3.19984124,5.23062472 2.20996229,5.21575128 3.01567771,5.05214341 C3.19984124,5.02239652 2.85453463,4.99264964 2.57828934,4.9777762 C2.07183965,4.94802931 1.54236952,4.93315587 1.10498115,4.90340898 C0,4.79929489 0.138122643,4.68030735 1.42726731,4.62081358 C2.11788053,4.57619325 2.87755507,4.56131981 3.66025005,4.56131981 C5.24866045,4.54644636 6.81405041,4.51669948 8.40246081,4.4869526 C7.73486803,4.41258538 6.95217305,4.41258538 6.16947807,4.41258538 C5.29470133,4.41258538 4.39690415,4.42745883 3.54514785,4.41258538 C3.19984124,4.41258538 2.78547331,4.39771194 2.71641199,4.35309161 C2.64735066,4.30847129 2.94661639,4.2787244 3.26890256,4.26385096 C3.95951578,4.21923063 4.67314943,4.15973686 5.54792618,4.15973686 C8.37944037,4.14486342 11.233975,4.11511653 14.0654892,4.14486342 C15.101409,4.15973686 16.1143084,4.12998998 17.1502282,4.11511653 C21.8463981,4.08536965 26.542568,4.11511653 31.2387378,4.10024309 C35.5205398,4.10024309 39.7793213,4.11511653 44.0611232,4.11511653 C48.7112522,4.10024309 53.3613812,4.05562276 57.9884898,4.10024309 C59.5078389,4.11511653 61.0732288,4.10024309 62.6386188,4.08536965 C66.8053185,4.05562276 70.9720183,4.08536965 75.138718,4.07049621 C81.1930939,4.04074932 87.2474697,4.05562276 93.2788252,4.04074932 C96.3635642,4.04074932 99.4483032,4.07049621 102.556063,4.07049621 C103.845207,4.07049621 105.04227,4.12998998 106.308395,4.14486342 C109.508236,4.20435719 112.754118,4.1746103 116,4.20435719 C110.659258,4.26385096 105.295495,4.23410407 99.9317325,4.2787244 C103.914269,4.33821817 107.988887,4.30847129 112.224648,4.33821817 C110.429053,4.44233227 109.853542,4.45720571 108.334193,4.45720571 C107.252233,4.45720571 106.193292,4.45720571 105.088311,4.47207915 C104.075412,4.4869526 103.039492,4.4869526 102.003572,4.47207915 C101.312959,4.45720571 100.599325,4.44233227 99.6554872,4.51669948 C101.220877,4.54644636 102.533042,4.54644636 103.822187,4.54644636 C104.673943,4.54644636 105.54872,4.51669948 106.239333,4.60594013 C106.60766,4.65056046 107.367335,4.63568702 107.827744,4.60594013 C108.449295,4.56131981 108.909704,4.56131981 109.485215,4.60594013 C109.669379,4.62081358 109.945624,4.62081358 110.198849,4.63568702 C111.741218,4.6654339 111.741218,4.6654339 111.165707,4.82904177 C112.086525,4.85878866 112.477873,4.73980112 113.37567,4.73980112 C114.250447,4.75467456 114.96408,4.769548 115.539591,4.84391521 C115.125223,4.8736621 114.641794,4.8736621 114.227426,4.8736621 C111.027585,4.8736621 107.850764,4.94802931 104.650923,4.91828243 C103.868228,4.90340898 102.510022,4.88853554 102.440961,4.96290275 C102.348879,5.05214341 103.661044,5.00752308 104.328637,5.02239652 C105.387577,5.05214341 106.492558,5.03726997 107.574519,5.03726997 C107.988887,5.03726997 108.495336,5.02239652 108.863663,5.06701685 C108.403255,5.11163718 107.873784,5.09676374 107.390355,5.09676374 C105.479659,5.11163718 103.568962,5.11163718 101.658266,5.14138406 C100.85255,5.15625751 100.392141,5.17113095 100.32308,5.2603716 C100.254019,5.3644857 99.6785076,5.37935914 98.8037309,5.3644857 C97.7908315,5.34961226 96.7779321,5.33473882 95.7650327,5.30499193 C94.6140107,5.29011849 93.53205,5.34961226 92.4731097,5.3644857 C91.5062512,5.37935914 90.5393927,5.30499193 89.2962889,5.30499193 C85.8432229,5.31986537 82.3901568,5.37935914 78.9370907,5.40910603 C78.6838658,5.40910603 78.3385592,5.42397947 78.1774162,5.40910603 C77.0033737,5.31986537 75.9674539,5.34961226 74.770391,5.43885291 C74.1258186,5.48347324 73.1589601,5.4685998 72.3302243,5.48347324 C73.7344711,5.51322013 75.138718,5.52809357 76.5659853,5.51322013 C77.7170073,5.49834668 78.8219885,5.52809357 79.9499901,5.54296701 C81.2391347,5.55784045 82.6203612,5.54296701 83.8864854,5.51322013 C84.8303235,5.49834668 85.6360389,5.49834668 86.4417543,5.52809357 C87.2014289,5.55784045 87.9150625,5.55784045 88.6977575,5.54296701 C90.4933519,5.49834668 92.3580075,5.45372636 94.0845406,5.55784045 L94.0845406,5.55784045 Z M91.8961039,4.96955873 C90.7044001,4.95016021 89.8724559,4.93076168 88.8831169,5.00835577 C89.9174259,5.08594986 90.74937,5.10534838 91.8961039,4.96955873 Z M93.3724675,4.03450419 C92.2877922,3.99570715 91.5044156,3.97630863 90.4197403,4.05390271 C91.5345455,4.09269976 92.3179221,4.09269976 93.3724675,4.03450419 Z M59.2202597,5.01655435 C60.0337662,5.05535139 60.5761039,5.05535139 61.2992208,4.99715582 C60.5761039,4.9777573 60.0638961,4.95835878 59.2202597,5.01655435 Z M97.3194805,4.04095243 C97.0181818,4.00215539 96.6566234,4.00215539 96.3553247,4.00215539 C96.0238961,4.00215539 95.5418182,3.98275687 95.5116883,4.06035096 C96.0841558,4.099148 96.6264935,4.07974948 97.3194805,4.04095243 Z M97.0040743,4.04074932 C96.9438145,4.00195228 96.7027756,4.00195228 96.4014769,4.00195228 C96.130308,4.00195228 95.8290093,4.0213508 95.8290093,4.04074932 C95.7988795,4.07954636 96.130308,4.07954636 96.4014769,4.07954636 C96.6726457,4.07954636 96.9438145,4.07954636 97.0040743,4.04074932 Z M97.843095,5.03977318 C98.1745236,5.03977318 98.5059521,5.02037466 98.4155625,5.00097614 C98.3854327,4.98157762 98.1142638,4.98157762 97.9334846,4.98157762 C97.6623158,4.98157762 97.3610171,4.98157762 97.4212768,5.02037466 C97.4815366,5.02037466 97.7527054,5.02037466 97.843095,5.03977318 Z M10.7864935,4.05859596 C11.7205195,4.05859596 12.3231169,4.07799448 13.3174026,4.01979892 C12.3231169,4.03919744 11.7205195,4.0004004 10.7864935,4.05859596 Z M93.4369469,5.03977318 C93.5273365,5.03977318 93.7081157,5.02037466 93.7081157,5.02037466 C93.7382456,5.00097614 93.5574663,4.98157762 93.3766871,4.98157762 C93.2862975,4.98157762 93.1055183,5.00097614 93.1055183,5.00097614 C93.0452585,5.03977318 93.2260378,5.03977318 93.4369469,5.03977318 Z M64.6758363,6 C64.7963558,6 64.977135,6 65.0072649,6 C65.1579143,5.98060148 64.977135,5.96120296 64.7963558,5.96120296 C64.7059662,5.96120296 64.5854467,5.96120296 64.4950571,5.98060148 C64.5553169,5.98060148 64.6155766,5.98060148 64.6758363,6 Z M90.6789362,4.03643854 C90.5885466,4.03643854 90.4680271,4.01704002 90.3776375,4.01704002 C90.1365986,4.01704002 90.0160791,4.03643854 90.1667284,4.05583706 C90.2269882,4.05583706 90.4077674,4.07523558 90.498157,4.05583706 C90.5885466,4.07523558 90.6186765,4.05583706 90.6789362,4.03643854 Z M86.2696559,4.0213508 C86.0888766,4.0213508 85.9080974,4.0213508 85.7273182,4.0213508 C85.546539,4.0213508 85.4260195,4.04074932 85.4862792,4.04074932 C85.6369286,4.04074932 85.8478377,4.06014784 86.0286169,4.06014784 C86.1792662,4.06014784 86.2696559,4.04074932 86.2696559,4.0213508 Z\"><\/path>\n <\/g>\n <\/svg>\n <\/div>\n <div class=\"highlight-box-headline\">\n \n <span class=\"highlight-box-title\">\n Income tax vs national insurance <\/span>\n <\/div>\n \n <div class=\"highlight-box-content\">\n <p>National Insurance (NI) is another deduction taken from UK earnings. The amount you pay is known as a National Insurance contribution or NIC. NIC rates are also frozen until 2028 under the current government.<\/p>\n<p>NI and income tax are both progressive taxes where higher earners pay more. However, there are three differences between the two levies:<\/p>\n<ul>\n<li>NI has just two tax tiers compared to income tax, which has between three and six<\/li>\n<li>Income tax serves as a broad funding source for the government, but NI contributions <em>only <\/em>fund the NHS, unemployment benefits, and state pensions<\/li>\n<li>NI is exclusively paid on wages or company profits for the self-employed (unlike income tax, which is paid on all income sources)<\/li>\n<\/ul>\n<p>The UK government introduced staggered cuts to NICs in 2024, totalling 4%. <strong>Find out more about the latest NIC rates and your tax obligations in our guide to <\/strong><a href=\"https:\/\/startups.co.uk\/people\/payroll\/national-insurance-rates\/\"><strong>National Insurance rates for 2024<\/strong><\/a><strong>.<\/strong><\/p>\n <\/div>\n <\/div>\n[\/vc_column][\/vc_row][vc_row][vc_column]<div class=\"jumplink-anchor-section\">\n <div class=\"jumplink-anchor-pointer\" id=\"link-personal-allowance\"><\/div>\n<\/div>\n[vc_column_text]\n<h2>Personal Allowance<\/h2>\n<p>The personal allowance is defined as the amount of income you can earn each tax year before you start paying income tax. For the 2024\/25 tax year, the current<strong> personal allowance is &pound;12,570 <\/strong>for employees across the UK and including Scotland.<\/p>\n<p>That means the first &pound;12,570 that an individual earns in a set financial year will be tax-free, and is also why the basic rate and Scottish starter rate of income tax both start at <strong>&pound;12,571<\/strong>.<\/p>\n<h3>What is the 60% tax trap?<\/h3>\n<p>Nothing is ever simple in the land of HMRC. One &lsquo;quirk&rsquo; of the personal allowance is that the standard tax-free allowance begins to shrink when you earn over &pound;100,000.<\/p>\n<p>For every &pound;2 earned above &pound;100,000, the individual loses &pound;1 of their personal allowance, so you won&rsquo;t get any personal allowance if you earn over &pound;125,140.<\/p>\n<p>Also known as the &lsquo;<a href=\"https:\/\/startups.co.uk\/people\/payroll\/60-per-cent-tax-trap\/\"><strong>60% tax trap<\/strong><\/a>&rsquo;, the result means higher-rate taxpayers (those earning between &pound;50,271 and &pound;125,140) could pay up to 60% tax on earnings.<\/p>\n<p>There are ways to avoid this significant tax burden, such as contributing more to a pension or making charitable donations. You can also consult with a <a href=\"https:\/\/startups.co.uk\/people\/payroll\/payroll-service-providers\/\">payroll service provider<\/a> for expert advice on how to minimise your tax burden if this affects you as an employee, a business owner, or any higher paid employees of your business.<\/p>\n<h3>Other allowances<\/h3>\n<p>Besides the personal allowance, there are a few other tax allowances available in the UK, depending on your circumstances. They are:<\/p>\n<ul>\n<li><strong>Marriage Allowance:<\/strong> married earners or civil partners can transfer part of an unused personal allowance to their spouse\/partner<\/li>\n<li><strong>Trading Allowance:<\/strong> self-employed workers can deduct the first &pound;1,000 of trading profits from their taxable income<\/li>\n<li><strong>Dividend Tax Allowance:<\/strong> company owners can receive up to &pound;500 of income from shares you own in a company before paying tax on them (which is why many self-employed business owners use dividends to <a href=\"https:\/\/startups.co.uk\/people\/how-to-decide-how-to-pay-yourself-in-your-business\/\">pay themselves as an employer<\/a>).<\/li>\n<\/ul>\n<p><strong>Read more:<\/strong> <a href=\"https:\/\/startups.co.uk\/people\/payroll\/bonus-tax-uk\/\">How to tax bonuses correctly<\/a>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column]<\/p><div class=\"jumplink-anchor-section\">\n <div class=\"jumplink-anchor-pointer\" id=\"link-tax-brackets-for-sole-traders-and-self-employed\"><\/div>\n<\/div>\n[vc_column_text]\n<h2>Tax brackets for sole traders and self-employed<\/h2>\n<p>There is no difference between the amount of tax you pay as a sole trader versus an employee. <strong>Business drawings<\/strong>, the most popular method for self-employed workers to pay themselves, are <strong>taxed at the same rate as income tax<\/strong>.<\/p>\n<p><em>How <\/em>you report tax does differ, however. Income tax levies are usually deducted from <a href=\"https:\/\/startups.co.uk\/people\/payroll\/best-hr-payroll-software\/\">small business payroll software<\/a> through HMRC&rsquo;s Pay As You Earn (PAYE) system.<\/p>\n<p>Self-employed workers must instead report their income tax bill (and National Insurance contributions) as part of their <a href=\"https:\/\/startups.co.uk\/tax\/how-to-do-a-tax-return\/\">Self Assessment tax return<\/a> at the end of the year.<\/p>\n<h3>Tax brackets for side hustlers<\/h3>\n<p>More of us are starting side hustles than ever before, leading to a big payday for some. Last year, research revealed some <a href=\"https:\/\/startups.co.uk\/news\/side-hustlers-earn-over-annual-living-wage\/\">side hustlers earn up to &pound;22,900 a year<\/a>, around &pound;1,600 <em>more <\/em>than the Living Wage at the time.<\/p>\n<p>Tax regulators have hastened to keep pace with the phenomenon. At the start of this year, everyone from Etsy sellers to babysitters became confused by the introduction of the &lsquo;<a href=\"https:\/\/startups.co.uk\/news\/side-hustle-tax\/\">Side Hustle Tax<\/a>&rsquo;, a phrase which instantly conjures up images of bailiffs and tax collectors.<\/p>\n<p>In truth, the new legislation is not an extra charge. Under the changes, side hustlers earning over the trading allowance of &pound;1,000 must <strong>register <\/strong>for self-assessment. But they still won&rsquo;t pay tax if they earn under the personal allowance, which is the same rule for sole traders.<\/p>\n<p>It&rsquo;s worth noting that you can only get the personal allowance <strong>once.<\/strong> Self-employed people must add all their side hustle earnings to the income from their main job and be taxed on the combined total by HMRC &ndash; hence the need to register for self-assessment.<\/p>\n<h2>UK tax brackets in summary<\/h2>\n<p>UK tax is an esoteric subject that feels at times almost deliberately muddled. Remember that the system is designed to fund essential public services &ndash; not just to trip you up.<\/p>\n<p>By taking the time to understand tax brackets, side hustlers, self-employed workers, and employees can contribute their fair share while maximising take-home pay via allowable expenses and deductions.[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_column_text]The saying goes that nothing in life is certain except death and taxes. But anyone who pays employees and has wrestled with the UK tax code will tell you that &ldquo;certain&rdquo; is a far cry from how they&rsquo;d describe it. Income tax rates have been frozen since 2021 in England, Northern Ireland, and Wales, but [&hellip;]<\/p>\n","protected":false},"author":91483,"featured_media":158367,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3116],"tags":[],"acf":[],"yoast_head":"\n<title>UK Tax Brackets: How Much Tax Will I Pay In 2024? - Startups<\/title>\n<meta name=\"description\" content=\"We explain the different income tax brackets across the UK for employees and the self-employed - as well as allowances you qualify for.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UK Tax Brackets: How Much Tax Will I Pay In 2024? - Startups\" \/>\n<meta property=\"og:description\" content=\"We explain the different income tax brackets across the UK for employees and the self-employed - as well as allowances you qualify for.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/\" \/>\n<meta property=\"og:site_name\" content=\"Startups.co.uk\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/startups.co.uk\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-09T11:04:35+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-06-11T10:56:33+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1500\" \/>\n\t<meta property=\"og:image:height\" content=\"1026\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Helena Young\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@startupstowers\" \/>\n<meta name=\"twitter:site\" content=\"@startupstowers\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Helena Young\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/\"},\"author\":{\"name\":\"Helena Young\",\"@id\":\"https:\/\/startups.co.uk\/#\/schema\/person\/df7a45df2f532172a027cd47886bbbeb\"},\"headline\":\"UK tax brackets 2024\/25: rates and personal allowances\",\"datePublished\":\"2024-04-09T11:04:35+00:00\",\"dateModified\":\"2024-06-11T10:56:33+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/\"},\"wordCount\":1487,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/startups.co.uk\/#organization\"},\"image\":{\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg\",\"articleSection\":[\"Tax\"],\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#respond\"]}],\"copyrightYear\":\"2024\",\"copyrightHolder\":{\"@id\":\"https:\/\/startups.co.uk\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/\",\"url\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/\",\"name\":\"UK Tax Brackets: How Much Tax Will I Pay In 2024? - Startups\",\"isPartOf\":{\"@id\":\"https:\/\/startups.co.uk\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg\",\"datePublished\":\"2024-04-09T11:04:35+00:00\",\"dateModified\":\"2024-06-11T10:56:33+00:00\",\"description\":\"We explain the different income tax brackets across the UK for employees and the self-employed - as well as allowances you qualify for.\",\"breadcrumb\":{\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#breadcrumb\"},\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage\",\"url\":\"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg\",\"contentUrl\":\"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg\",\"width\":1500,\"height\":1026,\"caption\":\"Income Tax Monopoly (1)\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/startups.co.uk\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Tax\",\"item\":\"https:\/\/startups.co.uk\/tax\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"UK tax brackets 2024\/25: rates and personal allowances\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/startups.co.uk\/#website\",\"url\":\"https:\/\/startups.co.uk\/\",\"name\":\"Startups.co.uk\",\"description\":\"Empowering UK startups since 2000\",\"publisher\":{\"@id\":\"https:\/\/startups.co.uk\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/startups.co.uk\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-GB\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/startups.co.uk\/#organization\",\"name\":\"Startups.co.uk\",\"url\":\"https:\/\/startups.co.uk\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\/\/startups.co.uk\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2023\/01\/Startups-loog.jpg\",\"contentUrl\":\"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2023\/01\/Startups-loog.jpg\",\"width\":801,\"height\":801,\"caption\":\"Startups.co.uk\"},\"image\":{\"@id\":\"https:\/\/startups.co.uk\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/startups.co.uk\",\"https:\/\/x.com\/startupstowers\",\"https:\/\/www.linkedin.com\/company\/mvf-startups\/\",\"https:\/\/www.youtube.com\/c\/StartupsCoUk\",\"https:\/\/en.wikipedia.org\/wiki\/Startups.co.uk\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/startups.co.uk\/#\/schema\/person\/df7a45df2f532172a027cd47886bbbeb\",\"name\":\"Helena Young\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\/\/startups.co.uk\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/f0bd7833d2e29eac4a0645d04cadd973?s=96&d=blank&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/f0bd7833d2e29eac4a0645d04cadd973?s=96&d=blank&r=g\",\"caption\":\"Helena Young\"},\"url\":\"https:\/\/startups.co.uk\/author\/helena-young\/\"}]}<\/script>\n","yoast_head_json":{"title":"UK Tax Brackets: How Much Tax Will I Pay In 2024? - Startups","description":"We explain the different income tax brackets across the UK for employees and the self-employed - as well as allowances you qualify for.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/","og_locale":"en_GB","og_type":"article","og_title":"UK Tax Brackets: How Much Tax Will I Pay In 2024? - Startups","og_description":"We explain the different income tax brackets across the UK for employees and the self-employed - as well as allowances you qualify for.","og_url":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/","og_site_name":"Startups.co.uk","article_publisher":"https:\/\/www.facebook.com\/startups.co.uk","article_published_time":"2024-04-09T11:04:35+00:00","article_modified_time":"2024-06-11T10:56:33+00:00","og_image":[{"width":1500,"height":1026,"url":"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg","type":"image\/jpeg"}],"author":"Helena Young","twitter_card":"summary_large_image","twitter_creator":"@startupstowers","twitter_site":"@startupstowers","twitter_misc":{"Written by":"Helena Young","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#article","isPartOf":{"@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/"},"author":{"name":"Helena Young","@id":"https:\/\/startups.co.uk\/#\/schema\/person\/df7a45df2f532172a027cd47886bbbeb"},"headline":"UK tax brackets 2024\/25: rates and personal allowances","datePublished":"2024-04-09T11:04:35+00:00","dateModified":"2024-06-11T10:56:33+00:00","mainEntityOfPage":{"@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/"},"wordCount":1487,"commentCount":0,"publisher":{"@id":"https:\/\/startups.co.uk\/#organization"},"image":{"@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage"},"thumbnailUrl":"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg","articleSection":["Tax"],"inLanguage":"en-GB","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#respond"]}],"copyrightYear":"2024","copyrightHolder":{"@id":"https:\/\/startups.co.uk\/#organization"}},{"@type":"WebPage","@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/","url":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/","name":"UK Tax Brackets: How Much Tax Will I Pay In 2024? - Startups","isPartOf":{"@id":"https:\/\/startups.co.uk\/#website"},"primaryImageOfPage":{"@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage"},"image":{"@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage"},"thumbnailUrl":"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg","datePublished":"2024-04-09T11:04:35+00:00","dateModified":"2024-06-11T10:56:33+00:00","description":"We explain the different income tax brackets across the UK for employees and the self-employed - as well as allowances you qualify for.","breadcrumb":{"@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#breadcrumb"},"inLanguage":"en-GB","potentialAction":[{"@type":"ReadAction","target":["https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/"]}]},{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#primaryimage","url":"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg","contentUrl":"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2024\/04\/Income-Tax-Monopoly-1.jpg","width":1500,"height":1026,"caption":"Income Tax Monopoly (1)"},{"@type":"BreadcrumbList","@id":"https:\/\/startups.co.uk\/tax\/uk-tax-brackets\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/startups.co.uk\/"},{"@type":"ListItem","position":2,"name":"Tax","item":"https:\/\/startups.co.uk\/tax\/"},{"@type":"ListItem","position":3,"name":"UK tax brackets 2024\/25: rates and personal allowances"}]},{"@type":"WebSite","@id":"https:\/\/startups.co.uk\/#website","url":"https:\/\/startups.co.uk\/","name":"Startups.co.uk","description":"Empowering UK startups since 2000","publisher":{"@id":"https:\/\/startups.co.uk\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/startups.co.uk\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-GB"},{"@type":"Organization","@id":"https:\/\/startups.co.uk\/#organization","name":"Startups.co.uk","url":"https:\/\/startups.co.uk\/","logo":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/startups.co.uk\/#\/schema\/logo\/image\/","url":"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2023\/01\/Startups-loog.jpg","contentUrl":"https:\/\/images.startups.co.uk\/wp-content\/uploads\/2023\/01\/Startups-loog.jpg","width":801,"height":801,"caption":"Startups.co.uk"},"image":{"@id":"https:\/\/startups.co.uk\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/startups.co.uk","https:\/\/x.com\/startupstowers","https:\/\/www.linkedin.com\/company\/mvf-startups\/","https:\/\/www.youtube.com\/c\/StartupsCoUk","https:\/\/en.wikipedia.org\/wiki\/Startups.co.uk"]},{"@type":"Person","@id":"https:\/\/startups.co.uk\/#\/schema\/person\/df7a45df2f532172a027cd47886bbbeb","name":"Helena Young","image":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/startups.co.uk\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/f0bd7833d2e29eac4a0645d04cadd973?s=96&d=blank&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/f0bd7833d2e29eac4a0645d04cadd973?s=96&d=blank&r=g","caption":"Helena Young"},"url":"https:\/\/startups.co.uk\/author\/helena-young\/"}]}},"_links":{"self":[{"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/posts\/158366"}],"collection":[{"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/users\/91483"}],"replies":[{"embeddable":true,"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/comments?post=158366"}],"version-history":[{"count":0,"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/posts\/158366\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/media\/158367"}],"wp:attachment":[{"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/media?parent=158366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/categories?post=158366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/startups.co.uk\/wp-json\/wp\/v2\/tags?post=158366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}