UK Income Tax Rate 2024/25 – Complete Guide to Allowance and Thre hold

Understanding your tax liability starts with knowing the exact rates and allowances for the current tax year. For the 2024/25 tax year in England, Wales, and Northern Ireland, the structure remains largely unchanged from the previous year, with a personal allowance of £12,570 and standard rates of 20%, 40%, and 45% applied above specific thresholds. This guide provides a clear breakdown of those numbers, explains how they compare to recent years, and outlines what is known about future tax years.

What are the UK income tax rates for 2024/25?

The core structure for the 2024/25 tax year is defined by four key thresholds. These figures apply to taxpayers in England, Wales, and Northern Ireland, with separate rules for Scotland.

Several important details underpin these figures. The personal allowance has been frozen at £12,570 since the 2021/22 tax year and is currently set to remain at this level until April 2028. This freeze, combined with the higher rate threshold also being frozen at £50,270, creates a phenomenon known as “fiscal drag,” where more people are pulled into higher tax bands as their wages increase over time. The additional rate threshold was lowered from £150,000 to £125,140 in the 2023/24 tax year and remains at that level. Dividend income is taxed at separate rates: 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers, with the dividend allowance reduced to £500 for 2024/25. Scottish taxpayers face a different set of bands and rates, which are detailed later in this guide.

How do the 2024/25 tax rates compare to 2023/24 and earlier years?

The headline UK income tax bands have remained completely unchanged across the 2023/24, 2024/25, and 2025/26 tax years for the standard UK-wide structure. The personal allowance has been fixed at £12,570, the basic rate band runs from £12,571 to £50,270, and the higher rate threshold sits at £125,140. The additional rate remains at 45% for income above this level.

Comparison with 2023/24

According to multiple official sources including GOV.UK and GoSimpleTax, the thresholds and rates for 2024/25 are identical to those for 2023/24. The only notable change between these years was the reduction of the dividend allowance from £1,000 to £500, which took effect in the 2024/25 tax year.

Historical context since 1980

A full historical schedule of UK income tax rates from 1980 to the present is not available from the supplied sources alone. What can be stated is that the modern structure has evolved to include a personal allowance, a basic rate, a higher rate, and an additional rate. The current personal allowance of £12,570, with its taper zone between £100,000 and £125,140, represents a significant increase from the lower allowances seen in previous decades. The additional rate was reintroduced in the 2010s after a period when the top rate was 50% before being reduced to 45%.

What are the projected UK income tax rates for 2025/26 and 2026/27?

Based on current legislation and confirmed by sources such as PwC and HMRC’s official publication, the main UK-wide income tax thresholds and rates for 2025/26 are expected to remain the same as for 2024/25. The personal allowance will stay at £12,570, and the basic, higher, and additional rate thresholds are unchanged. The dividend allowance for 2025/26 is confirmed at £500, consistent with the 2024/25 level.

No confirmed official rates for the 2026/27 tax year were found in the provided sources. The last year with confirmed figures in the supplied materials is 2025/26. Future rates are subject to change in subsequent Budget announcements, and taxpayers should check official HMRC publications for updates after those announcements are made.

Personal Tax Allowance for 2025/26

The personal allowance for 2025/26 is confirmed at £12,570, according to both the official GOV.UK page and the PwC tax summary. This is part of the current freeze that extends until April 2028.

How can I calculate my income tax for the 2024/25 tax year?

Calculating your income tax for the 2024/25 tax year involves applying the relevant rates to your taxable income above the personal allowance. Taxable income includes wages, salaries, rental income, and most other sources, but not income held in an ISA.

For a straightforward calculation, you start with your adjusted net income, subtract the personal allowance of £12,570, and then apply the 20% basic rate to income between £12,571 and £50,270. Income between £50,271 and £125,140 is taxed at 40%, and any income above £125,140 is taxed at 45%. If your income exceeds £100,000, you must account for the personal allowance taper. Dividend income above the £500 allowance is taxed at the dividend rates of 8.75%, 33.75%, or 39.35%, depending on your income tax band.

Timeline of key income tax rate changes (1980 to present)

While a complete year-by-year table from 1980 is not available in the provided research, the following timeline highlights significant milestones based on the known structure and the available sources.

1. 1980s: High top rates of income tax, with the top rate at 60% for much of the decade before being reduced.
2. 1990s: Progressive reductions in the top rate, with the basic rate being cut and the personal allowance being increased over time.
3. 2010s: The additional rate of 45% was introduced, replacing a temporary 50% rate. The personal allowance began its major increases from around £6,475 to over £12,500.
4. 2020s: The personal allowance reached £12,570 and was frozen. The additional rate threshold was lowered from £150,000 to £125,140 in 2023/24. The dividend allowance was halved from £1,000 to £500 in 2024/25.

The current structure with a personal allowance of £12,570 and a taper zone between £100,000 and £125,140 has been in place since the 2021/22 tax year.

What is confirmed and what remains uncertain?

What is the background and meaning of these rates?

The frozen thresholds mean many more taxpayers are being pulled into higher tax bands as their incomes rise due to inflation and wage growth. This “fiscal drag” represents a silent tax increase that generates additional revenue for the government without any formal rate change. The reduction of the additional rate threshold from £150,000 to £125,140 in 2023/24 was a significant policy change that increased revenue from higher earners. Dividend tax rates are now higher in real terms for many taxpayers due to the halving of the dividend allowance. The current structure reflects decisions made during a period of high inflation and cost-of-living pressures, with the government prioritizing revenue stability.

What are the key sources for this information?

“For 2024/25 these three rates are 20%, 40% and 45% respectively.”

House of Commons Library research briefing (CBP-9993)

“Personal Allowance: Up to £12,570 – 0% tax.”

GOV.UK – Income Tax rates and Personal Allowances

The primary sources for the rates and allowances in this guide are the official HMRC publication on income tax rates, the House of Commons Library research briefing on direct taxes for 2024/25, and the PwC UK tax summary for individuals. These sources are authoritative and reflect the current legislation.

Summary: what you need to know about UK income tax rates for 2024/25

The core UK income tax rates for 2024/25 are unchanged from 2023/24, with a personal allowance of £12,570, a basic rate of 20% up to £50,270, a higher rate of 40% up to £125,140, and an additional rate of 45% above that. The dividend allowance has been halved to £500. Scottish taxpayers face separate bands with a top rate of 48%. These thresholds are frozen until 2028, leading to fiscal drag as incomes rise. For practical planning, understanding these bands can also help when considering your overall financial picture, such as how much you can borrow for a mortgage. You can read our How Much Mortgage Can I Get – UK Affordability Guide for more on how income affects borrowing power. For those managing their finances, using a free tool like our Interest Only Mortgage Calculator – Free UK Tools from Top Banks can help with planning.

Frequently asked questions