Income Tax
| Allowances | 2025/26 | 2024/25 |
|---|---|---|
| Personal Allowance (PA) | £12,570 | £12,570 |
| Marriage Allowance | £1,260 | £1,260 |
| Blind Person’s Allowance | £3,130 | £3,070 |
| Rent-a-room relief* | £7,500 | £7,500 |
| Trading income allowance* | £1,000 | £1,000 |
| Property income allowance* | £1,000 | £1,000 |
- Personal Allowance is withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There is no allowance given above £125,140.
- Marriage Allowance The part of the PA that is transferable to a spouse or civil partner who is not a higher or additional rate taxpayer.
- * If gross income exceeds this, the limit may be deducted instead of actual expenses.
| Rate bands | 2025/26 | 2024/25 |
|---|---|---|
| Basic Rate Band (BRB) | £1 - £37,700 | £1 - £37,700 |
| Higher Rate Band (HRB) | £37,701 – £125,140 | £37,701 – £125,140 |
| Additional rate | over £125,140 | over £125,140 |
|
Personal Savings Allowance (PSA):
– Basic rate taxpayer £1,000
– Higher rate taxpayer £500
|
||
| Dividend Allowance (DA) | £500 | £1,000 |
Rates differ for General/Savings/Dividend income
| 2025/26 | General Income | Savings Income | Dividends Income |
|---|---|---|---|
| Basic rate % | 20% | 20% | 8.75% |
| Higher rate % | 40% | 40% | 33.75% |
| Additional rate % | 45% | 45% | 39.35% |
BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.
General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (mainly interest).
Where savings income falls in the first £5,000 of the BRB, it is taxed at nil rather than 20%.
The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.
Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £500 of dividend income at nil, rather than the rate that would otherwise apply.
High Income Child Benefit Charge (HICBC)
Corporation Tax
| Year to 31.3.2026 | 31.3.2025 | |
|---|---|---|
| Main rate (profits above £250,000) | 25% | 25% |
| Small profits rate (profits up to £50,000) | 19% | 19% |
| Marginal relief band (MRB) | £50k – £250k | £50k – £250k |
| Fraction in MRB (effective marginal rate) | 3/200 (26.5%) | 3/200 (26.5%) |
Capital Gains Tax
| Lower rate | 18% |
| Higher rate | 24% |
| Annual exempt amount | £3,000 |
| Lifetime limit | £1,000,000 |
| Rate of tax | 14% |
National Insurance Contributions
| Class 1 Employee | |
| £1 - £12,570 per year | Nil |
| £12,571 - £50,270 per year | 8% |
| £50,271 and above per year | 2% |
| Class 1 Employer | |
| £1 - £5,000 per year | Nil |
| £5,001 and above per year | 15% |
| Employment allowance | £10,500 |
| Class 1A | |
| Rate | 15% |
| Class 4 | |
| £1 - £12,570 per year | Nil |
| £12,571 - £50,270 per year | 6% |
| £50,271 and above per year | 2% |
Where weekly or monthly calculations are required, the Class 1 limits shown above should be divided by 52 (weekly) or 12 (monthly) as applicable.
Main Capital Allowances
| Year to 31.3.26 | Year to 31.3.25 | |
|---|---|---|
| Plant and Machinery | ||
| – Main Pool | 18% | 18% |
| – Special Rate Pool | 6% | 6% |
| Annual Investment Allowance (AIA) | ||
| – expenditure up to £1m | 100% | 100% |
| Enhanced capital allowances for companies | ||
| Main Pool first year allowance | 100% | 100% |
| Special Rate Pool first year allowance | 50% | 50% |
| CO2 (g/km) | Allowance | |
|---|---|---|
| New cars only | Nil | 100% |
| In general pool | up to 50 | 18% |
| In special rate pool | above 50 | 6% |
| Fixed deduction per annum | 3% |
Vehicle Benefits
Taxable benefit: List price of car multiplied by chargeable percentage.
| CO2 g/km | Electric Range miles | 2025/26 | 2024/25 |
|---|---|---|---|
| 0 | N/A | 3 | 2 |
| 1-50 | >130 | 3 | 2 |
| 1-50 | 70 – 129 | 6 | 5 |
| 1-50 | 40 – 69 | 9 | 8 |
| 1-50 | 30 – 39 | 13 | 12 |
| 1-50 | <30 | 15 | 14 |
| 51-54 | N/A | 16 | 15 |
- Then a further 1% for each 5g/km CO2 emissions, up to a maximum of 37%.
- Diesel cars that are not RDE2 standard suffer a 4% supplement on the above figures but are still capped at 37%.
Chargeable value of £4,020 (2024/25: £3,960) if private use is more than home-to-work. Zero-emission vans charged at £Nil (2024/25: £Nil).
Employer provides fuel for private motoring in an employer-owned:
- Car: CO2-based percentage from above table multiplied by £28,200 (2024/25: £27,800).
- Van: £769 (2024/25: £757).
Tax-Free Mileage Allowances
| Employee’s own transport | per business mile |
|---|---|
| Cars first 10,000 miles | 45p |
| Cars over 10,000 miles | 25p |
| Business passengers | 5p |
| Motorcycles | 24p |
| Bicycles | 20p |
Value Added Tax
Standard rate (1/6 of VAT-inclusive price) 20%
| From 1.4.2024 | Pre 1.4.2024 | |
|---|---|---|
| Registration level – Taxable turnover | £90,000 | £85,000 |
| Deregistration level – Taxable turnover | £88,000 | £83,000 |
Flat Rate Scheme (FRS)
| Annual taxable turnover to enter scheme | Up to £150,000 |
| Must leave scheme if annual gross turnover | Exceeds £230,000 |
If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of ‘FRS turnover’ rather than the net of output tax over input tax. Input tax is usually not recoverable.
Inheritance Tax
| 2025/26 | 2024/25 | |
|---|---|---|
| Nil rate band (NRB) | £325,000 | £325,000 |
| NRB Residential enhancement (RNRB) | 175,000 | 175,000 |
| Tax rate on death | 40% | 40% |
| Tax rate on lifetime transfers to most trusts | 20% | 20% |
100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.
Reduced Tax Charge on Gifts Within 7 Years Before Death
| Years before death | 0-3 | 3-4 | 4-5 | 5-6 | 6-7 |
|---|---|---|---|---|---|
| % of full death tax charge payable | 100 | 80 | 60 | 40 | 20 |
Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.
Key Dates and Deadlines
| 2025/26 | 2024/25 | |
|---|---|---|
| 1st payment on account (online) | 31 January 2026 | 2025 |
| 2nd payment on account | 31 July 2026 | 2025 |
| Balancing payment | 31 January 2027 | 2026 |
| Capital Gains Tax* | 31 January 2026 | 2025 |
| Class 1A NIC | 19 July 2026 | 2025 |
| Issuing annual P60s to employees | 31 May 2027 | 2026 |
| Self Assessment return deadline (paper/postal) | 31 Oct 2025 | 2024 |
Corporation tax is due 9 months and 1 day from the end of the accounting period, unless a ‘large’ company paying by quarterly instalments.
* For 24/25 tax year, taxpayers must report and pay and CGT within the 60 days of the completion date of the disposal.