UK Tax Brackets 2024

Paying taxes is an important responsibility of every UK citizen, to understand your taxable income you must understand the UK tax brackets. The UK taxpayers can explore the tax rates and allowances for the 2024 year to understand how much taxes they will owe to the UK government.

In the UK, HM Revenue & Customs administers and oversees the tax system. The tax system of the UK can be complex for new taxpayers with various exemptions, allowances, and rates applied to individuals depending upon the circumstances.

The UK taxpayers pay taxes for the tax year (6 April to 5 April of the next year) based on the tax bands and rates on earned income. The UK tax system charges income tax on the earned income at three rates – basic rates, higher rates, and additional rates.

The UK tax system has personal allowance below and people with earnings below personal allowances do not pay any taxes to the agency. The taxpayers will pay taxes based on the following UK tax brackets for the 2024-25 tax year:

Tax rates	Bands	Rates
Basic rates	£1 to £37,700	20%
Higher rate	£37,701 to £125,140	40%
Additional rate	Above £125140	45%

The above tax rates are applied to non-dividend non-savings income, which includes pensions, property, or employment. The income tax rates for England, Northern Ireland, and Walles in the tax year stay the same, whereas Scotland’s rates may differ from them.

The dividend rates for for 2024-25 tax year are as follows:

Tax rates	Rates
Basic rates	8.75%
Higher rate	33.75%
Additional rate	39.35%

Scotland Tax rates 2024-25

The HMRC collects the income tax and National Insurance contributions form the taxpayers based on the below tax brackets:

Tax rates	Bands	Rates
Starter tax rate	Up to £2,306	19%
Basic rates	£2,307 to £13,991	20%
Intermediate Rate	£13,992 to £31,092	21%
Higher rate	£31,093 to £62, 430	42%
Advanced Rate	£62,431 to £125,140	45%
Top Tax rate	Above £125,140	48%

UK tax allowances and exemptions 2024-25

UK taxpayers with income less than an annual personal allowance of £12, 570 are exempted from paying the taxes. The taxpayers do not pay tax on any dividend income that falls within your personal allowance. The UK people pay taxes on dividend income when it goes above the dividend allowance of £500.

Personal Tax allowance

The personal allowance of the UK people is reduced by £1 for every £2 when the income goes over the income limit of £100,000. The income limit differs for the married couple allowance as it is an age-related allowance. The Marriage couple’s personal allowance is reduced by £1 for £2 income earned over the £37,000 income limit.

The Personal allowance can be higher if the people claim the Blind Person’s allowance or marriage allowance.

Blind Person’s allowance:

The Blind person’s allowance increases the amount of income you earn before paying the taxes. For the 2024-25 tax year, the blind personal allowance is around £3,070, it remains the same regardless of the person’s age and income.

Marriage Allowance:

The allowance is available for common law partners and couples who did not receive the Marriage Couples allowance. For the 2024-25 tax year, the marriage allowance applicable for a spouse or civil partner who is not liable to taxes can transfer £12,60 to their civil partner/ spouse.

Other allowances and thresholds that taxpayers:

Capital Gains tax annual exempt amount for individuals on capital assets profits and gains on selling or disposition on your assets is £3000 for the 2024-25 tax year.
The inheritance tax threshold for the 2024-25 tax year is around £325,000.

How to Calculate your income tax on taxable income in the UK?

The UK taxpayers can calculate their taxes on their earned income in the following way:

Calculate your Gross income for the year by adding all your income from state benefits to your earnings.
Now, subtract your annual income from a tax-free allowance for personal allowance or any other allowance that applies to you.
Now, check in which band the resultant value falls to see what tax rate you will be paying the income tax to the HMRC.

For instance, your earning income for the 2024 tax year is around £80,000.

Subtract the personal allowance £80,000 – £12,570 = £67,430.
Now, it comes under 20% and 40%, so, you can calculate your taxes in the following way:

You will pay 20% tax on £37,700= £7540
Remaining taxable income £67,430 – £37,700 = £29,730
40% tax remaining taxable income = £11892.
So, the total tax that you will pay on your earned income = £11892 + £7540 = £19,432.

If you can’t calculate your taxes, you can take the help of the HMRC tax calculator available on the government website.

Income tax rates freeze till 2028

Earlier this year, Jeremy Hunt confirmed the extension on freezing the taxes in the UK till 2028. The tax rates and allowances in the UK are frozen for the next six years.

According to reports, the frozen income tax threshold and rates would drag many UK people into higher rate UK tax brackets.

Other than the income tax, the UK people also pay National Insurance Contributions on their income which goes to the government social security benefits. The taxpayers can reduce their taxes with National insurance contributions in the income taxes, and other tax deductions for the tax year.

The UK tax system may seem complex for some taxpayers, but you can easily understand it by understanding the tax benefits and allowances applicable to you and calculating your taxes based on the UK tax brackets.

UK Tax Brackets 2024 – Check the Tax Rate and Other Details!