Income tax
Income tax rates, personal allowances, trusts etc.
Rates
Income tax applies to the amount of income after deduction of personal allowances.
Income is taxed in a specific order with savings and dividend income taxed last.
Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.
The starting rate band is only applicable to savings income. The 0% rate is not available if the taxable amount of non-savings income exceeds the starting rate band.
The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.
Income tax is devolved to Wales on non-savings and non-dividend income. Welsh resident taxpayers continue to pay the same overall income tax rates using the UK rates and bands. The total rate of income tax = UK income tax + Welsh rate of income tax. Savings income and dividend income are taxed using UK tax rates and bands.
2024/25:
| Type | Band of taxable income (£) | Rate (%) | Rate if dividends (%) |
|---|---|---|---|
| Basic rate | 0 - 37,700 | 20 | 8.75 |
| Higher rate | 37,701 - 125,140 | 40 | 33.75 |
| Additional rate | Over 125,140 | 45 | 39.35 |
For Scottish residents the following bands apply for non-savings and non-dividend income:
| Type | Band of taxable income (£) | Rate (%) |
|---|---|---|
| Starter rate | 0 - 2,306 | 19 |
| Basic rate | 2,307 - 13,991 | 20 |
| Intermediate rate | 13,992 - 31,092 | 21 |
| Higher rate | 31,093 - 62,430 | 42 |
| Advanced rate | 62,431 - 125,140 | 45 |
| Top rate | Over 125,140 | 48 |
For Welsh residents the following bands apply for non-savings and non-dividend income:
| Band of taxable income (£) | UK Rate (%) | Welsh Rate (%) | Overall Rate (%) |
|---|---|---|---|
| 0 - 37,700 | 10 | 10 | 20 |
| 37,701 - 125,140 | 30 | 10 | 40 |
| Over 125,140 | 35 | 10 | 45 |
There are special rates for savings and dividend income falling into above bands of taxable income.
Savings Allowance:
| Band of taxpayer | Amount (£) | Rate (%) |
|---|---|---|
| Basic rate | 1,000 | 0 |
| Higher rate | 500 | 0 |
| Additional rate | 0 | N/a |
Dividend Allowance:
| Band of taxpayer | Amount (£) | Rate (%) |
|---|---|---|
| All | 500 | 0 |
2023/24:
| Type | Band of taxable income (£) | Rate (%) | Rate if dividends (%) |
|---|---|---|---|
| Basic rate | 0 - 37,700 | 20 | 8.75 |
| Higher rate | 37,701 - 125,140 | 40 | 33.75 |
| Additional rate | Over 125,140 | 45 | 39.35 |
For Scottish residents the following bands apply for non-savings and non-dividend income:
| Type | Band of taxable income (£) | Rate (%) |
|---|---|---|
| Starter rate | 0 - 2,162 | 19 |
| Basic rate | 2,163 - 13,118 | 20 |
| Intermediate rate | 13,119 - 31,092 | 21 |
| Higher rate | 31,093 - 125,140 | 42 |
| Top rate | Over 125,140 | 47 |
For Welsh residents the following bands apply for non-savings and non-dividend income:
| Band of taxable income (£) | UK Rate (%) | Welsh Rate (%) | Overall Rate (%) |
|---|---|---|---|
| 0 - 37,700 | 10 | 10 | 20 |
| 37,701 - 125,140 | 30 | 10 | 40 |
| Over 125,140 | 35 | 10 | 45 |
There are special rates for savings and dividend income falling into above bands of taxable income.
Savings Allowance:
| Band of taxpayer | Amount (£) | Rate (%) |
|---|---|---|
| Basic rate | 1,000 | 0 |
| Higher rate | 500 | 0 |
| Additional rate | 0 | N/a |
Dividend Allowance:
| Band of taxpayer | Amount (£) | Rate (%) |
|---|---|---|
| All | 1,000 | 0 |
Allowances
A personal allowance gives an individual an annual amount of income free from income tax.
Income above the personal allowances is subject to income tax.
The personal allowance will be reduced if an individual's 'adjusted net income' is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.
An individual born before 6 April 1935 may be entitled to a married couple's allowance but this is reduced if 'adjusted net income' is above the married couple's allowance income limit (see table below).
Marriage allowance - 10% of the personal allowance may be transferable between certain spouses where neither pays tax above the basic rate. The Marriage allowance is not available to couples entitled to the Married Couple's allowance.
Personal Allowance
| Allowances | 2024/25 (£) | 2023/24 (£) |
|---|---|---|
| Personal allowance | 12,570 | 12,570 |
| Marriage allowance | 1,260 | 1,260 |
Blind person's allowance
£3,070 (2023/24: £2,870)
Married couple's allowance
Either partner born before 6th April 1935.
| Reduction in tax bill | 2024/25 (£) | 2023/24 (£) |
|---|---|---|
| Maximum | 1,108.00 | 1,037.50 |
| Minimum | 428.00 | 401.00 |
| Age allowance income limit 1 | 37,000 | 34,600 |
Note...
- Reduce married couples allowance by £1 for every £2 of 'adjusted net income' above this limit.
