Business Debt Service: Tax Sheet 2024 - 25
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|
Personal Allowances |
2023/24 £ |
2024/25 £ |
|
Personal allowance (1) |
12,570 |
12,570 |
|
Income Limit For Personal Allowance (Born after 5 April 1948) |
100,000 |
100,000 |
|
Income Limit for Personal Allowance (Born before 6 April 1948) |
31,400 |
37,700 |
|
Income Limit for Married couples allowance (2) |
31,400
|
37,700 |
|
Married couples allowance (maximum allowance) |
10375 |
1260 of Personal Allowance |
|
Blind Person’s Allowance |
2870 |
3070 |
(1) Since 2016/17 everyone is entitled to the same personal allowance and income limit, irrespective of age.
(2) These allowances reduce where the income is above the income limit by £1 for every £2 of income above the £100,000 limit.
| Income rate and bands | 2023/24 £ | 2024/25 £ | |
| Basic rate | 20% | 0 - 37,700 | 12,571 - 50,270 |
| Higher rate | 40% | 37,700 – 125,140 | 50,271 - 125,140 |
| Additional rate | 45% | Over 125,140 | Over 125,140 |
| National Insurance Contributions for Sole Traders | 2023/24 £ | 2024/25 £ | |
| Class 2 | 3.45 per week | 3.45 per week | |
| Class 2 | Earnings Exception Limit | 12,570 per annum | 6725 per annum |
| Class 4 | Lower profits limit | 12,570 per annum | 12,570 per annum |
| Upper profits limit | 50,270 per annum | 50,270 per annum | |
| Rate between upper and lower profits limit | 9% | 6% | |
| Rate above upper profits limit | 2% | 2% |
Calculation of estimated monthly tax 2024/25 (£)
This can be used as a guide to how much you need to put aside for tax and national insurance within your business and household budget. There is an example on page 3/4 of this fact sheet. There is no provision for Additional Rate if income is greater than £125,140 (taxed at 45%) - please speak to an accountant.
|
Your monthly business income or ‘drawings’ |
|
A
|
|
|
Multiply by 12 to get the annual figure |
|
B
|
|
|
Tax allowance (refer to personal allowances) |
|
C
|
|
|
Taxable amount (B-C) |
|
D
|
|
|
First £37,700 of D x 20% |
|
E
|
|
|
D - £37,700 (if answer is greater than 0) x 40% |
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F
|
|
|
E + F = estimated tax liability |
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G
|
|
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Divide G by 12 to get monthly amount |
|
H
|
|
The calculated figure in H is your ‘estimated monthly Income tax amount’
Calculation of estimated National Insurance Contributions 2024/25 (£)
Class 2 - Use a flat-rate of £3.45 per week (£14.95 per month) for your class 2 National Insurance figure.
|
Class 4 |
|
|
|
|
1 |
Figure B from the tax calculation table above (If above the maximum of £50,270 then insert £50,270) |
|
I
|
|
2 |
Less £12,570 |
|
J |
|
3 |
J x 6% = rate payable between upper and lower limits |
|
K |
|
4 |
Figure B from above minus £50,270 (if figure is less than 0 insert 0) |
|
L |
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5 |
L x 2%= rate payable above upper limit |
|
M |
|
6 |
K + M = total annual class 4 contributions |
|
N |
|
7 |
Divide N by 12 to get monthly amount |
|
O |
The calculated figure in O is your ‘estimated monthly National Insurance Class 4 amount’
This is an example of the calculation for tax and national insurance where you have worked through your business budget and your monthly drawings is £3,950.
|
1 |
Your monthly business income or ‘drawings’ |
3,950 |
A |
|
2 |
Multiply by 12 to get the annual figure |
47,400 |
B |
|
3 |
Tax allowance (refer to personal allowances) |
12570 |
C |
|
4 |
Taxable amount (B-C) |
34830 |
D |
|
5 |
First - £37,700 of D x 20% (£34,830 X20%) |
6966 |
E |
|
6 |
D - £37,700 (if answer is greater than 0) x 40% |
0 |
F |
|
7 |
E + F = estimated tax liability |
6966 |
G |
|
8 |
Divide G by 12 to get monthly amount |
580.50 |
H |
The calculated figure in H of £580.50 is your ‘estimated monthly Income tax amount’.
Calculation of estimated National Insurance Contributions 2024/25 (£)
Class 2
Use a flat-rate of £3.45 per week (£14.95 per month) for your class 2 National Insurance figure.
To calculate your class 4 National Insurance liability, you can use the guide below.
|
Class 4 |
|
|
|
|
1 |
Figure B from above (If above the maximum of £50,270 then insert -£50,270) |
47,400 |
I
|
|
2 |
Less £12,570 |
34,830 |
J
|
|
3 |
J x 6% = rate payable between upper and lower limits |
2,089.80 |
K
|
|
4 |
Figure B from above minus £50,270 (if less than 0 insert 0) |
Nil |
L
|
|
5 |
L x 2%= rate payable above upper limit |
Nil |
M
|
|
6 |
K + M = total annual class 4 contributions |
2,089.80 |
N
|
|
7 |
Divide N by 12 to get monthly amount |
261.23 |
O
|
The calculated figure in O of £261.23 is your ‘estimated monthly National Insurance Class 4 amount’
|
Corporation Tax |
2023/24 |
2024/25 |
|
Small profits rate £0 – £50,000 |
19% |
19% |
|
Main Rate £50,000-250,000 |
25% |
25% |
|
Value Added Tax (VAT) |
2023/2024 |
2024/25 |
|
Standard Rate |
20% |
20% |
|
Reduced Rate |
5% |
5% |
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Zero Rate |
0% |
0% |
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Registration Level |
85,000 |
90,000 |
|
De-registration |
83,000 |
83,000 |
|
National Insurance Contributions Class 1 |
2023/2024 |
2024/25 |
|
Directors and employees |
|
|
|
Lower earnings limit primary Class 1 |
£123 per week |
£123 per week |
|
Upper earnings limit primary Class 1 |
£967 per week |
£967 per week |
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Primary threshold |
£242 per week |
£242 per week |
|
Secondary threshold |
£175 per week |
£175 per week |
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Rates |
|
|
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Class 1 rate between primary threshold and upper |
12% |
8% |
|
Class 1 rate above upper earnings limit |
2% |
2% |
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Class 1A rate on employer provided benefits |
13.8% |
13.8% |
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Employers rates |
|
|
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Secondary class 1 rate above second threshold |
13.8% |
13.8% |