Tax rates and thresholds for 2024 – Important updates

In this blog we prepared a summary about the changes for the 2024/25 Tax Year.

The National Minimum Wage will increase from the 1st April 2024 as follows:

Category of workerHourly rate
Aged 21 and above (national living wage rate)£11.44
Aged 18 to 20 inclusive£8.60
Aged under 18 (but above compulsory school leaving age)£6.40

Tax thresholds, rates and codes

The standard employee personal allowance for the 2024 to 2025 tax year is:

  • £242 per week
  • £1,048 per month
  • £12,570 per year

Above that limit, the Tax Rates are as follows:

England, Wales and Northern Ireland

Basic tax rate20%Up to £37,700
Higher tax rate40%From £37,701 to £125,140
Additional tax rate45%Above £125,140


PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold)
Personal allowance0%Up to £12,570
Starter tax rate19%From £12,571 to £14,876
Basic tax rate20%From £ 14,877 to £26,561
Intermediate tax rate21%From £26,562 to £43,662
Higher tax rate42%From £43,663 to £75,000
Advanced tax rate45%From £75,001 to £125,140
Top tax rate48%Above £125,140

Class 1 National Insurance thresholds

Employee NI Contribution0%Up to £1,048 per month
8%From £1,049 to £4,189 per month
2%Above £4,189 per month


Employer NI Contribution0%Up to £758 per month
13.8%From £758 per month


Employment Allowance

Employment Allowance allows employers to reduce their annual National Insurance liability by up to the annual allowance amount if the total employers’ Class 1 National Insurance liabilities is less than £100,000 and there are at least one more Employee or paid Director on payroll apart from the sole Director.

Allowance2024 to 2025 rate
Employment Allowance£5,000

Self-employed: Class 2 National Insurance

Class 2 contributions are how the self-employed build up entitlement to the state pension. For 2024/25, Class 2 contributions are payable voluntarily at £3.45 per week where profits are below £6,725 per year.

Where profits exceed £6,725 per year the Class 2 contributions are automatically added and are not payable anymore.

Self-employed: Class 4 National Insurance

The self-employed also pay Class 4 contributions on their profits. These contributions do not secure any benefit entitlement and are more akin to a tax.

For 2024/25, Class 4 contributions are payable at the main rate of 6% where profits are between £12,570 and £50,270, and at the additional Class 4 rate of 2% on profits above £50,270 per year.

Both the Class 2 and Class 4 National Insurance are payable once in the year with the annual tax liability included in the Self Assessment Tax Return for 2024/25.

The dividend tax rates in 2024/25

This year the dividend tax rates are:

  • 0% on the first £500 from dividends (this is called the Dividend Allowance)
  • 0% if your total income is under the Personal Allowance (£12,570)
  • 8.75% if you’re a basic rate taxpayer (up to £50,270 combined income)
  • 33.75% if you’re a higher rate taxpayer (only for the part goes over the £50,270 limit)
  • 39.35% if you’re an additional rate taxpayer (above £125,140 – at this point you also lose your Personal Allowance as the income is over £100,000)

VAT registration threshold

You must register to VAT if:

  • your total VAT taxable turnover for the last 12 months was over £90,000 (the VAT threshold)
  • you expect your turnover to go over £90,000 in the next 30 days