UK Tax Rates 2024 / 2025

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• The current tax year is from 6 April 2024 to 5 April 2025.

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• The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. It’s smaller if your income is over £100,000 as your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above.

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Starting Savings Rate

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You may also get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.

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The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.

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If your other income is £17,570 or more you’re not eligible for the starting rate for savings.

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If your other income is less than £17,570 your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.

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For Example:

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You earn £16,000 of wages and get £2000 interest on your savings.

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Your Personal Allowance is £12,570. It’s used up by the first £12,570 of your wages.

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The remaining £3,430 of your wages (£16,000 minus £12,570) reduces your starting rate for savings by £3,430.

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Your remaining starting rate for savings is £1,570 (£5,000 minus £3,430). This means you will have to pay tax on your £430 savings interest. (£2,000 - £1,570)

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Personal Savings Allowance

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You may also get up to £1,000 of interest and not have to pay tax on it, depending on which Income Tax Band you’re in. Note this is in addition to the £5,000 Starting Savings Rate allowance above. 

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This is your Personal Savings Allowance.

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Income Tax band                    Personal Savings Allowance

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Basic rate                                £1,000

Higher rate                              £500

Additional rate                         £0

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Your allowance applies to interest from:

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• bank and building society accounts

• savings and credit union accounts

• unit trusts, investment trusts and open-ended investment companies

• peer-to-peer lending

• trust funds

• payment protection insurance (PPI)

• government or company bonds

• life annuity payments

• some life insurance contracts

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Savings in tax-free accounts like Individual Savings Accounts (ISAs) and some National Savings and Investments accounts do not count towards your allowance.

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If you have a joint account, interest will be split equally between the account holders. Contact the savings helpline if you think it should be split differently

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Starting Saving Allowance and Personal Savings Allowance Interaction 

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If you earn £15,000 income from your job and £7,000 from savings, Then

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• Income £15,000 - £12,570 (Personal Allowance) = £2,430 Taxable

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• Interest £7,000 - £2,570 (Starting Savings Allowance) - £1,000 (Personal Savings Allowance) =£3,430 Taxable

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• Total Taxable Income + Savings Interest =  £5,680

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* Taxable Starting Savings Allowance = £15,000 (income) - £12,570 (Personal Allowance = £2,430

* Tax free Starting Savings Allowance =£5,000 -2430 = £2,570 

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Trading Allowance

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The trading allowance is a tax exemption of up to £1,000 a year for individuals with trading income from:

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• self-employment

• casual services, for example, babysitting or gardening (helpsheet 325 has more information about other taxable income)

• hiring personal equipment, for example, power tools

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Contains public sector information licensed under the Open Government Licence v3.0.