Tax Rates and Allowances
At Windfall Accounting LLP, we understand that navigating tax rates and allowances can be a complex and time-consuming task for individuals and businesses alike. Our expert team is here to provide clear, up-to-date information and personalised advice to help you stay compliant and optimise your tax position.
Whether you need guidance on personal tax allowances or corporation tax rates, we make sure you understand your obligations while taking advantage of all available allowances.
Key Tax Rates and Allowances
Personal Allowances
- Personal Tax-Free Allowance: Each individual is entitled to a personal allowance, which is the amount of income they can earn before paying tax. For the current tax year 2024-25, the standard personal allowance is £12,570, though this can vary depending on individual circumstances. Personal allowance is restricted by £1 for every £2 of income over £100k.
- Marriage Allowance: If eligible, you can transfer a portion of your personal allowance to your spouse or civil partner, potentially reducing the tax you owe as a couple. It is currently £1,206.
- Income Tax Rates 2024-25:
- Basic rate: 20% on income up to £37,700
- Higher rate: 40% on income between £37,701 and £125,140.
- Additional rate: 45% on income over £125,140.
Business Tax Rates
- Corporation Tax: Companies pay corporation tax on their profits. The current corporation tax rate is 19% for small profits up to £50,000. Main rate of corporation tax for profits over £250,000 is 25%. Profits between £50,000 and £250,000 are subject to a marginal relief.
- Dividend Allowance: Shareholders can receive a tax-free dividend allowance of £500 for 2024-25. Last year it was £1,000. Dividends above this threshold are taxed at different rates depending on the taxpayer’s income tax band.
- Capital Gains Tax (CGT): CGT applies when you sell an asset for a profit. The current rate for basic rate taxpayers is 10% and for higher rate taxpayers, it is 20%. There may be exemptions and allowances, such as the annual CGT allowance of £3,000 for tax year 2024-25.
VAT (Value Added Tax)
- The standard VAT rate is 20%, with reduced rates of 5% on certain goods and services and a zero rate for others (such as most food and children’s clothes). Understanding VAT thresholds and compliance requirements is critical for businesses. Our team ensures that you stay on top of VAT filing and reclaim opportunities.
National Insurance Contributions (NICs)
- Employees: NICs are deducted from employee wages based on income thresholds, with category A rates of 0%, 8% and 2%. Employee NIC categories range between A to Z and rates differ for different categories. Speak to one of our team members to find out more.
- Employers: Employers also contribute NICs for their employees, and the rate is 0% and 13.8% depending on the employee’s income band. Speak to one of our team members to find out more.
- Self-Employed: Self-employed individuals pay Class 2 and Class 4 NICs depending on their profits. Speak to one of our team members to find out more.
How We Can Help
At Windfall Accounting LLP, we don’t just keep you compliant; we work to minimize your tax burden and maximize your financial efficiency. Our team stays up-to-date with the latest tax rates, allowances, and legislative changes, offering tailored advice to suit your unique financial situation. Whether you need help with personal tax planning, business tax strategy, or VAT compliance, we’re here to help.
Contact Us Today to find out how we can assist you with tax rates, allowances, and tax planning to optimise your financial future.