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Tax allowances and amounts

This fact sheet covers England & WalesWe also have a version for Scotland if you need it.

This fact sheet tells you about the current tax rates and allowances. Use this fact sheet to find out about:

  • personal allowances for income tax;
  • income tax rates and bands;
  • National Insurance contributions for sole traders and partners in a business partnership;
  • National Insurance contributions for directors of limited companies and employees;
  • corporation tax; and
  • value added tax (VAT).

Income tax allowances

Personal allowances2023/242024/25
Personal allowance (1)£12,570£12,570
Income limit for personal allowance (2)£100,000£100,000
Income limit for married couple's allowance (3)£34,600£37,000
Married couple's allowance (maximum amount) (4)£10,375£11,080
Married couple's allowance (minimum amount) (5)£4,010£4,280
Blind person's allowance£2,870£3,070


(1) and (2) Since 2016/17 everyone is entitled to the same Personal allowance and income limit, no matter when they were born.

(3) Where income is above this figure, the allowance is reduced by £1 for every £2 above the limit.

(4) and (5) The relief for Married couple's allowance is given at 10%.

Income tax rates and bands

Basic rate 20%Up to £37,700Up to  £37,700
Higher rate 40%Above £37,700 up to £125,140Above £37,700 up to £125,140
Additional rate 45%Above £125,140Above £125,140
  • Income tax is paid on the amount of taxable income remaining after you have deducted any allowances you are entitled to, such as the Personal allowance and Blind person’s allowance.

  • Your Personal allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means that your Personal allowance is zero if your income is £125,140 or above for tax years 2023/24 and 2024/25.

  • From 2020/21 tax relief for finance costs for individual landlords of residential properties is fully restricted to the Basic rate only. For more information about the changes which were phased in from 2017/18, see HM Revenue & Customs guidance on Tax relief for residential landlords: how it's worked out.

Welsh Rates of Income Tax (WRIT)

Since 6 April 2019, if you live in Wales, you will pay the WRIT.  If you are self-employed you will be asked about your country of residence on your self assessment tax return.

Welsh tax payers currently pay the same amount of tax as people living in England, but 10% will go directly to the Welsh Government. For more information, see GOV.Wales.

National Insurance contributions class 2 and class 4

Class 2 (6)£3.45pw-
Class 2 - Small profits threshold£6,725pa£6,725pa
Class 2 - Lower profits threshold (7)£12,570pa-
Class 4 - Lower profits limit£12,570pa£12,570pa
Class 4 - Upper profits limit£50,270pa£50,270pa
Class 4 - Rate between upper and lower profits limit9%6%
Class 4 - Rate above upper profits limit2%2%


(6) From 2024/25 self-employed individuals no longer have to pay Class 2 National Insurance contributions. Although, self-employed individuals with profits below the Small profits threshold can make voluntary contributions.

(7) For 2023/24 self-employed individuals did not pay Class 2 National Insurance contributions if their profits were between the Small profits threshold and the Lower profits threshold, but continued to build up National Insurance credits. For more information, see GOV.UK.

Example calculations

  • If you are under retirement age and either a sole trader or a partner in a partnership, the following example calculations will help you work out an estimate of the monthly income tax and National Insurance you should pay on your profit from your business.
  • You will then be able to work out your Available drawings from your business. This will help you work out your household budget to show you what you have available to pay your creditors.
  • In the following examples, the figure worked out on the business budget sheet for Drawings (what your profit is before tax and National Insurance) is £4,250 per month.
  • The example calculations should not be used for income from residential properties.

Online calculations

If you prefer, you can use our online budget to do the income tax and National Insurance calculations for you.

Estimated monthly income tax calculation for 2024/25

1.Insert the monthly Available drawings figure from Your business and household budget sheet£4,250A
2.Multiply Figure A by 12 to get your yearly drawings figure£51,000B
3.Insert your Personal allowance for income tax figure£12,570C
4.Take Figure C (your Personal allowance for income tax) away from Figure B (your yearly drawings) to work out what part of your drawings you pay tax on£38,430D
5.Multiply the first £37,700 of Figure D by 20% to work out how much Basic rate tax you need to pay£7,540E
6.Take £37,700 away from Figure D and multiply the answer by 40% to work out how much Higher rate tax you need to pay (you only need to do this step if Figure D is more than £37,700)£292F
7.Add together Figure E and Figure F to get an estimate of your yearly tax liability£7,832G
8.Divide Figure G by 12 to get an estimate of your monthly tax liability£652.67H

Use H £652.67 as the Estimated tax figure on Your business and household budget sheet.

Estimated Class 4 National Insurance contribution calculations for 2024/25

1.Use Figure B from above (unless Figure B is more than the Upper profits limit of £50,270, then insert £50,270)£50,270I
2.Figure I minus £12,570 (the Lower profits limit)£37,700J
3.Figure J multiplied by 6% (the rate payable between the lower and upper limits)£2,262K
4.Figure B from above minus £50,270 (if the answer is less than 0, insert 0)£730L
5.Figure L multiplied by 2% (the rate payable above the Upper profits limit)£14.60M
6.Add together Figure K and Figure M to get your estimated yearly amount of Class 4 contribution£2,276.60N
7.Divide Figure N by 12 to get your estimated monthly Class 4 contribution£189.72O

Use O £189.72 as the National Insurance class 4 figure on Your business and household budget sheet.

Online calculations

Remember, if you prefer, you can use our online budget. It will work out the income tax and National Insurance calculations for you.

National Insurance contributions class 1


Lower earnings limit primary class 1£123pw£123pw
Upper earnings limit primary class 1£967pw£967pw
Primary threshold£242pw£242pw
Secondary threshold£175pw£175pw

Employee rates

2023/24 (from 6 April 2023 to 5 January 2024)2023/24 (from 6 January 2024 to 5 April 2024)2024/25
Class 1 rate between primary threshold and upper earnings limit12%10%8%
Class 1 rate above upper earnings limit2%2%2%

Employer rates

Secondary class 1 rate above second threshold13.8%13.8%
Class 1A rate on employer provided benefits13.8%13.8%

For information about National Insurance thresholds and rates that apply to special categories, such as for employers of qualifying veteran, freeport and apprentice employees, see GOV.UK.

Corporation tax

For non-ring fence profit

Main rate (companies with profits over £250,000)25%25%
Small profits rate (companies with profits under £50,000)19%19%
Marginal relief lower limit£50,000£50,000
Marginal relief upper limit£250,000£250,000
Marginal relief fraction3/2003/200

Since 1 April 2023, there is no longer a single corporation tax rate for non-ring fence profits. If your company has taxable profits between £50,000 and £250,000, from 1 April 2023 you may be able to claim marginal relief to reduce your corporation tax rate from the 25% main rate. Use the GOV.UK calculator to work out how much marginal relief you can claim.

Value added tax (VAT)

Standard rate20%20%
Reduced rate5%5%
Zero rate0%0%
Registration level£85,000£90,000
De-registration level£83,000£88,000

Making Tax Digital for VAT was introduced on 1 April 2019 for businesses with a taxable turnover above the VAT registration threshold. Since 1 April 2022, unless HMRC gives an exemption from doing so, all VAT registered businesses must be signed up to Making Tax Digital for VAT whatever their turnover. For more information, go to GOV.UK.