It can still be beneficial to incorporate and extract funds by taking a small salary and extracting further profits in the form of dividends (see Tips 25, 26 and 27). However, increases in the rates of corporation tax, employer’s National Insurance and dividend tax a cut in the dividend allowance, the abolition of Class 2 National Insurance contributions and the cut in the main rate of Class 4 National Insurance contributions have reduced the advantages of incorporation in recent years and muddied the waters, meaning that now incorporation is not always beneficial and will depend on the profit levels. There is no substitute for doing the sums.
A self-employed trader will pay income tax on their profits at 20% where these fall in the basic rate band, at 40% where these fall in the higher rate band and at 45% where these fall in the additional rate band. They will also pay Class 4 National Insurance contributions at 6% on profits between £12,570 and £50,270 and at 2% on profits in excess of £50,270.
For a personal company, a typical tax-efficient profit extraction strategy is to pay a small salary and to extract further profits as dividends. For 2025/26, assuming the personal allowance has not been used up elsewhere, the optimal salary is £12,570, equal to the personal allowance and the primary threshold.
Dividends do not attract National Insurance contributions, so by incorporating and extracting profits as dividends, you will save Class 4 National Insurance contributions. Dividends also benefit from a tax-free dividend allowance, set at £500 for 2025/26. Once the dividend allowance has been used up, dividends, taxed as the top slice of income, are taxed at 8.75% to the extent they fall in the basic rate band, 33.75% to the extent that they fall within the higher rate band and at 39.35% where they fall in the additional rate band.
It should be noted that dividends can only be paid from retained profits and for each class of share, shareholders must receive dividends in proportion to their shareholdings. The company is a separate legal entity which pays corporation tax on its profits. From 1 April 2023 onwards, the rate of corporation tax depends on the level of profits. A small profits rate of 19% applies where taxable profits do not exceed the lower limit, with a main rate of 25% applying where taxable profits are more than the upper limit. However, the effective rate is reduced by marginal relief where profits are between the lower limit and the upper limit.
Where the company has no associated companies, the lower limit is £50,000 and the upper limit is £250,000. If the company has one or more associated companies, these limits are divided by the number of associated companies plus one. The limits are reduced proportionately where the accounting period is less than 12 months. The rate at which corporation tax is paid will affect the post-tax profits available for distribution as a dividend.
As personal circumstances differ, there is no substitute for crunching the numbers. Consideration should also be given as to whether the costs of incorporation outweigh the tax and National Insurance savings.
Self-Employed? Is Incorporation Worthwhile? Harry is a sole trader, making profits of £50,000 a year. If he remains self-employed, in 2025/26, he will pay tax of £7,486 ((£50,000 – £12,570) @ 20%) on his profits. He will also pay Class 4 NICs of £2,245.80 ((£50,000 – £12,570) @ 6%). His total tax and NIC bill will be £9,731.80 leaving him with profits of £40,268.20.
If he incorporates the business and pays himself a salary of £12,570, assuming he is the sole employee and the director, he will not be entitled to the Employment Allowance. Therefore, the company will pay secondary NICs on the salary of £1,135.50 ((£12,570 – £5,000) @ 15%). The salary and the employer’s NIC are deductible in computing the company’s taxable profits, reducing the taxable profits to £36,295. As the profits are below the lower profits limit of £50,000, the company pays corporation tax at 19%, a tax bill of £6,8966, leaving post-tax profits of £29,399 to be extracted as a dividend. The first £500 of the dividend is tax-free. The remaining £28,899 is taxed at 8.75%, a tax bill of £2,528.66 leaving him with £26,870.34 of the dividend. Together with the salary of £12,570, Harry retains £38,440.34 of his profits.
For 2025/26, he is marginally better off by remaining self-employed. He also saves the additional administration associated with running a company. However, if he incorporates, he will have the choice as to whether to extract income from the company and pay personal taxes on it or leave it in the company and only incur corporation tax on his profits.
These figures apply to non-savings non-dividend income, including income from employment, property, or pensions. From 2017 to 2018, the main rates were separated into the main rates, the savings rates and the default rates.
Savings rates
Savings rates
Tax year 2024 to 2025
Tax year 2025 to 2026
Starting rate for savings
0%
0%
Savings basic rate
20%
20%
Savings higher rate
40%
40%
Savings additional rate
45%
45%
These figures apply to savings income.
Dividend rates
Tax year 2024 to 2025
Tax year 2025 to 2026
Dividend ordinary rate — for dividends otherwise taxable at the basic rate
8.75%
8.75%
Dividend upper rate — for dividends otherwise taxable at the higher rate
33.75%
33.75%
Dividend additional rate — for dividends otherwise taxable at the additional rate
39.35%
39.35%
These figures apply to dividend income received above the £500 tax-free dividend allowance.
Default rates
Tax year 2024 to 2025
Tax year 2025 to 2026
Default basic rate
20%
20%
Default higher rate
40%
40%
Default additional rate
45%
45%
These figures apply to non-savings and non-dividend income of any taxpayer that is not subject to either the main rates or the Scottish rates of Income Tax.
Starting rates for savings income
Tax year 2024 to 2025
Tax year 2025 to 2026
Starting rate for savings
0%
0%
Starting rate limit for savings
£5,000
£5,000
Income Tax rates for trustees’ income
Tax year 2024 to 2025
Tax year 2025 to 2026
Thresholds
£500 de minimis trusts amount
£500 de minimis trusts amount
Dividend ordinary rate
8.75%
8.75%
Default basic rate
20%
20%
Dividend trust rate for accumulated and discretionary dividend income
39.35%
39.35%
Trust rate for other accumulated and discretionary income
45%
45%
Income Tax allowances
Personal Allowance
Tax year 2024 to 2025
Tax year 2025 to 2026
Personal allowance
£12,570
£12,570
Income limit for Personal Allowance
£100,000
£100,000
Income limit for Married Couple’s Allowance
£37,000
£37,700
The Personal Allowance reduces where the income is above £100,000 — by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of date of birth.
The income limit for Married Couple’s Allowance is an age-related allowance. It is reduced by £1 for every £2 of income over this limit.
Marriage Allowance
Tax year 2024 to 2025
Tax year 2025 to 2026
Marriage Allowance
£1,260
£1,260
This transferable allowance is available to married couples and civil partners who are not in receipt of Married Couple’s Allowance. A spouse or civil partner who is not liable to Income Tax, or not liable at the higher or additional rates, can transfer this amount of their unused personal allowance to their spouse or civil partner. The recipient must not be liable to Income Tax at the higher or additional rates.
Married Couple’s Allowance for those born before 6 April 1935
Tax year 2024 to 2025
Tax year 2025 to 2026
Maximum amount of Married Couple’s Allowance
£11,080
£11,270
Minimum amount of Married Couple’s Allowance
£4,280
£4,360
The relief for this allowance is given at 10%.
Blind Person’s Allowance
Tax year 2024 to 2025
Tax year 2025 to 2026
Blind Person’s Allowance
£3,070
£3,130
Dividend Allowance
Tax year 2024 to 2025
Tax year 2025 to 2026
Dividend Allowance
£500
£500
Personal Savings Allowance
Tax year 2024 to 2025
Tax year 2025 to 2026
Personal Savings Allowance for basic rate taxpayers
£1,000
£1,000
Personal Savings Allowance for higher taxpayers
£500
£500
From April 2016, the new Personal Savings Allowance means that basic rate taxpayers do not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers do not have tax to pay on their first £500 of savings income.
Qualifying Care relief
As announced at Spring Budget 2023, the government will legislate to increase the amount of Income Tax relief available for foster carers and shared lives carers using Qualifying Care Relief. This is an annual increase in line with CPI inflation. The changes will take effect from 6 April 2025, for the tax year 2025 to 2026.
Tax year 2024 to 2025
Tax year 2025 to 2026
Annual fixed amount
£19,360
£19,690
Weekly amount — children under 11 years
£405
£415
Weekly amount — children 11 years or older
£485
£495
Weekly amount — adults
£485
£495
Company car tax — all cars
CO2 emissions, g/km
Electric range (miles)
Appropriate percentage (%) for 2024 to 2025
Appropriate percentage (%) for 2025 to 2026
Appropriate percentage (%) for 2026 to 2027
Appropriate percentage (%) for 2027 to 2028
Appropriate percentage (%) for 2028 to 2029
Appropriate percentage (%) for 2029 to 2030
0
Not applicable
2
3
4
5
7
9
1 to 50
More than 130
2
3
4
5
18
19
1 to 50
70 to 129
5
6
7
8
18
19
1 to 50
40 to 69
8
9
10
11
18
19
1 to 50
30 to 39
12
13
14
15
18
19
1 to 50
Less than 30
14
15
16
17
18
19
51 to 54
—
15
16
17
18
19
20
55 to 59
—
16
17
18
19
20
21
60 to 64
—
17
18
19
20
21
22
65 to 69
—
18
19
20
21
22
23
70 to 74
—
19
20
21
21
22
23
75 to 79
—
20
21
21
21
22
23
80 to 84
—
21
22
22
22
23
24
85 to 89
—
22
23
23
23
24
25
90 to 94
—
23
24
24
24
25
26
95 to 99
—
24
25
25
25
26
27
100 to 104
—
25
26
26
26
27
28
105 to 109
—
26
27
27
27
28
29
110 to 114
—
27
28
28
28
29
30
115 to 119
—
28
29
29
29
30
31
120 to 124
—
29
30
30
30
31
32
125 to 129
—
30
31
31
31
32
33
130 to 134
—
31
32
32
32
33
34
135 to 139
—
32
33
33
33
34
35
140 to 144
—
33
34
34
34
35
36
145 to 149
—
34
35
35
35
36
37
150 to 154
—
35
36
36
36
37
38
155 to 159
—
36
37
37
37
38
39
160 and over
—
37
37
37
37
38
39
For all cars, drivers must add 4% to their appropriate percentage if the car is propelled solely by diesel (up to a maximum of 37%). Cars that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt from the diesel supplement. The RDE2 standard sets a maximum permitted level of car NOx emissions in real world driving situations, and it is measured through portable emissions-measuring equipment in a variety of real driving trips. Rates for fully electric cars (0 grams per km) are capped at 5%.
Rates for ultra-low emission cars (1 to 74 grams per km) are capped at 20% for the tax year 2025 to 2026. They are capped at 21% for the tax years 2026 to 2027 and 2027 to 2028. Rates for bands 75 to 170 grams per km and above will remain frozen for the 2026 to 2027 and 2027 to 2028 tax years.
National Insurance contributions
Employee and employer Class 1 rates and thresholds (£ per week)
Tax year 2024 to 2025
Tax year 2025 to 2026
Lower Earnings Limit (LEL)
£123
£125
Primary Threshold (PT)
£242
£242
Secondary Threshold (ST)
£175
£96
Upper Earnings Limit (UEL)
£967
£967
Upper Secondary Threshold for under 21s
£967
£967
Apprentice Upper Secondary Threshold (AUST) for under 25s
£967
£967
Freeport Upper Secondary Threshold
£481
£481
Investment Zones Upper Secondary Threshold
£481
£481
Veteran Upper Secondary Threshold
£967
£967
Employment Allowance (per eligible employer)
£5,000 per year
£10,500 per year
Employee’s (primary) Class 1 contribution rates (per cent)
Earnings band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Lower Earnings Limit (LEL)
Not applicable
Not applicable
Lower Earning Limit (LEL) to Primary Threshold (PT)
0%
0%
Primary Threshold (PT) to Upper Earnings Limit (UEL)
8%
8%
Above Upper Earnings Limit (UEL)
2%
2%
Married woman’s reduced rate for (primary) Class 1 contribution rates
Tax year 2024 to 2025
Tax year 2025 to 2026
Weekly earnings from between the Primary Threshold (PT) and Upper Earnings Limit (UEL)
1.85%
1.85%
Weekly earnings above the Upper Earnings Limit (UEL)
2%
2%
Employer’s (secondary) Class 1 contribution rates
Earnings band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Secondary Threshold (ST)
0%
0%
Above Secondary Threshold (ST)
13.8%
15%
Employer’s (secondary) Class 1 contribution rates for employees under 21
Earnings band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Upper Secondary Threshold (UST)
0%
0%
Above Upper Secondary Threshold (UST)
13.8%
15%
Employer’s (secondary) Class 1 contribution rates for Apprentices under 25
Earnings band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Apprentice Upper Secondary Threshold (AUST)
0%
0%
Above Apprentice Upper Secondary Threshold (AUST)
13.8%
15%
Employer’s (secondary) Class 1 contribution rates for eligible employees of Freeports
Earnings band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Freeports Upper Secondary Threshold
0%
0%
Above Freeports Upper Secondary Threshold
13.8%
15%
Employer’s (secondary) Class 1 contribution rates for eligible employees of Investment Zones
Earnings band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Investment Zone Upper Secondary Threshold
0%
0%
Above Investment Zone Upper Secondary Threshold
13.8%
15%
Employer’s (secondary) Class 1 contribution rates for qualifying veterans
Earnings band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Veterans Upper Secondary Threshold (VUST)
0%
0%
Above Veterans Upper Secondary Threshold (VUST)
13.8%
15%
Self-employed Class 2 contributions rates and thresholds (£ per week)
Class 2 thresholds (£ annual profit)
Tax year 2024 to 2025
Tax year 2025 to 2026
Small Profits Thresholds (SPT)
£6,725
£6,845
Lower Profits Thresholds (LPT)
£12,570
£12,570
Class 2 contribution rates (£ per week)
Annual Profits Band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Small Profits Threshold (SPT)
£3.45 (voluntary)
£3.50 (voluntary)
Above Small Profits Threshold (SPT) to Lower Profits Threshold (LPT)
£0
£0
Above Lower Profits Threshold (LPT)
£0
£0
Special Class 2 rate for share fisherman
£4.10
£4.15
Special Class 2 rate for volunteer development workers
£6.15
£6.25
Class 3 National Insurance contributions: other rates and thresholds (£ per week)
Tax year 2024 to 2025
Tax year 2025 to 2026
Voluntary contributions
£17.45
£17.75
Self-employed Class 4 rates and thresholds (£ per year)
Tax year 2024 to 2025
Tax year 2025 to 2026
Lower Profits Limit (LPL)
£12,570
£12,570
Upper Profits Limit (UPL)
£50,270
£50,270
Class 4 contribution rates
Annual Profits band
Tax year 2024 to 2025
Tax year 2025 to 2026
Below Lower Profits Limit (LPL)
0%
0%
Lower profits Limit (LPL) to Upper Profits Limit (UPL)
6%
6%
Above Upper Profits Limit (UPL)
2%
2%
Self-employed National Insurance Contributions are calculated on an annual basis, therefore, the Lower Profits Limit was set at an average threshold of £11,908 for the 2022 to 2023 tax year which is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570, reflecting the position for employees.
Child Benefit, Guardian’s Allowance and tax credits
Following the publication of Consumer Price Index (CPI) figures for September 2023, the government announced at Autumn Statement 2023 the new benefits rates for 2024 to 2025.
Child Benefit (£ per week)
Tax year 2024 to 2025
Tax year 2025 to 2026
Eldest or only child
£25.60
£26.05
Other children
£16.95
£17.25
Guardian’s Allowance (£ per week)
Tax year 2024 to 2025
Tax year 2025 to 2026
Guardian’s Allowance
£21.75
£22.10
As there will be no tax credit awards after 5 April 2025, there will be no changes to rates for the tax year 2025 to 2026.
Working Tax Credit (£ per year unless stated)
Tax year 2024 to 2025
Tax year 2025 to 2026
Basic element
£2,435
Not applicable
Couple and lone parent element
£2,500
Not applicable
30 hour element
£1,015
Not applicable
Disabled worker element
£3,935
Not applicable
Severe disability element
£1,705
Not applicable
Childcare element of Working Tax Credit (£ per year unless stated)
Tax year 2024 to 2025
Tax year 2025 to 2026
Maximum eligible cost for one child
£175 per week
Not applicable
Maximum eligible cost for two or more children
£300 per week
Not applicable
Percentage of eligible costs covered
70%
Not applicable
Child Tax Credit (£ per year unless stated)
Tax year 2024 to 2025
Tax year 2025 to 2026
Family element
£545
Not applicable
Child element
£3,455
Not applicable
Disabled child element
£4,170
Not applicable
Severely disabled child element
£5,850
Not applicable
Income threshold
£7,955
Not applicable
Withdrawal rate (%)
41%
Not applicable
First threshold for those entitled to Child Tax Credit only
£19,995
Not applicable
Income rise disregard
£2,500
Not applicable
Income fall disregard
£2,500
Not applicable
Capital, assets and property
Pensions tax relief
Tax year 2024 to 2025
Tax year 2025 to 2026
Lump Sum Allowance
£268,275
£268,275
Lump Sum and Death Benefit Allowance
£1,073,100
£1,073,100
Overseas Transfer Allowance
£1,073,100
£1,073,100
Annual Allowance Limit
£60,000
£60,000
Money Purchase Annual Allowance
£10,000
£10,000
Tapered Annual Allowance (applies when an individual has ‘adjusted income’ over this amount provided the ‘threshold income’ test is met)
Rates for gains on assets other than residential property and carried interest
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
10%
18%
18%
Income Tax higher rate payer
20%
24%
24%
Rates for individuals for gains on residential property which is not eligible for Private Residence Relief
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
18%
18%
18%
Income Tax higher rate payer
24%
24%
24%
Rates for individuals for gains on carried interest
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
18%
18%
32%
Income Tax higher rate payer
28%
28%
32%
Rate for trustees and personal representatives for gains on assets other than residential property and carried interest
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
20%
24%
24%
Income Tax higher rate payer
20%
24%
24%
Rate for trustees and personal representatives for gains on residential property which is not eligible for Private Residence Relief
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
24%
24%
24%
Income Tax higher rate payer
24%
24%
24%
Rate for personal representatives for gains on carried interest
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
28%
28%
32%
Income Tax higher rate payer
28%
28%
32%
Annual exempt amount (AEA) for individuals and personal representatives
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
£3,000
£3,000
£3,000
Income Tax higher rate payer
£3,000
£3,000
£3,000
Annual exempt amount (AEA) for most trustees
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
£1,500
£1,500
£1,500
Income Tax higher rate payer
£1,500
£1,500
£1,500
Rate on gains subject to business asset disposal relief
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
10%
10%
14%
Income Tax higher rate payer
10%
10%
14%
Rate on gains subject to investors’ relief
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
10%
10%
14%
Income Tax higher rate payer
10%
10%
14%
Business asset disposal relief: lifetime limit on qualifying gains
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
£1 million
£1 million
£1 million
Income Tax higher rate payer
£1 million
£1 million
£1 million
Investors’ relief: lifetime limit on gains for external investors
Tax year 2024 to 2025 (6 April 2024 to 29 October 2024)
Tax year 2024 to 2025 (30 October 2024 to 5 April 2025)
Tax year 2025 to 2026
Income Tax basic rate payer
£10 million
£1 million
£1 million
Income Tax higher rate payer
£10 million
£1 million
£1 million
Temporary Repatriation Facility
Tax year 2025 to 2026
Tax year 2026 to 2027
Tax year 2027 to 2028
Rate of designated foreign income and gains (FIG)
12%
12%
15%
The Temporary Repatriation Facility (TRF) is available to former remittance basis users who have unremitted foreign income and gains for tax years prior to 2025 to 2026. Individuals can elect to pay tax at the TRF rate on offshore funds that they designate. The designated funds will then not be taxed on remittance to the UK. Former remittance basis users can also use the TRF to designate distributions from trust structures, which are matched to foreign income and gains which arose prior to April 2025.
Inheritance Tax
Tax year 2024 to 2025
Tax year 2025 to 2026
Rate (for estates)
40%
40%
Reduced rate (for estates leaving 10% or more to charity)
36%
36%
Rate (for chargeable lifetime transfers)
20%
20%
Nil-rate band limit
£325,000
£325,000
Residence nil-rate band limit
£175,000
£175,000
Taper threshold for residence nil-rate band
£2 million
£2 million
Stamp Duty Land Tax — residential property from 23 September 2022 to 30 October 2024
Property value
Rate (on portion of value above threshold)
Rate (on portion of value above threshold) if purchase is of an additional residential property
Rate (on portion of value above threshold) if purchase is of residential property by certain non-UK residents
Rate (on portion of value above threshold) if purchase is of an additional residential property and by certain non-UK residents
£0 to £250,000
0%
3%
2%
5%
£250,001 to £925,000
5%
8%
7%
10%
£925,001 to £1.5 million
10%
13%
12%
15%
Over £1.5 million
12%
15%
14%
17%
Stamp Duty Land Tax — residential property from 31 October 2024 to 31 March 2025
Property value
Rate (on portion of value above threshold)
Rate (on portion of value above threshold) if purchase is of an additional residential property
Rate (on portion of value above threshold) if purchase is of residential property by certain non-UK residents
Rate (on portion of value above threshold) if purchase is of an additional residential property and by certain non-UK residents
£0 to £250,000
0%
5%
2%
7%
£250,001 to £925,000
5%
10%
7%
12%
£925,001 to £1.5 million
10%
15%
12%
17%
Over £1.5 million
12%
17%
14%
19%
Stamp Duty Land Tax — residential property from 1 April 2025
Property value
Rate (on portion of value above threshold)
Rate (on portion of value above threshold) if purchase is of an additional residential property
Rate (on portion of value above threshold) if purchase is of residential property by certain non-UK residents
Rate (on portion of value above threshold) if purchase is of an additional residential property and by certain non-UK residents
£0 to £125,000
0%
5%
2%
7%
£125,001 to £250,000
2%
7%
4%
9%
£250,001 to £925,000
5%
10%
7%
12%
£925,001 to £1.5 million
10%
15%
12%
17%
Over £1.5 million
12%
17%
14%
19%
Check HMRC guidance on whether the higher rate applies and whether a purchase is a ‘non-resident’ transaction.
Stamp Duty Land Tax — residential leases between 23 September 2022 and 31 March 2025
Net Present Value (NPV) of the rent
Rate (on portion of value above threshold)
£0 to £250,000
0%
Over £250,000
1%
Rates are increased by 2 percentage points (%) for certain ‘non-resident’ transactions.
Stamp Duty Land Tax — residential leases from 1 April 2025
Net Present Value (NPV) of the rent
Rate (on portion of value above threshold)
£0 to £125,000
0%
Over £125,000
1%
Rates are increased by 2 percentage points (%) for certain ‘non-resident’ transactions.
Stamp Duty Land Tax — rates for first-time buyers purchasing properties worth £625,000 or less from 23 September 2022 to 31 March 2025
Property value
Rate (on portion of value above threshold) if purchase qualifies for first-time buyer relief
£0 to £425,000
0%
£425,001 to £625,000
5%
Rates are increased by 2 percentage points (%) for certain ‘non-resident’ transactions.
Stamp Duty Land Tax — rates for first time-buyers purchasing properties worth £500,000 or less from 1 April 2025
Property value
Rate (on portion of value above threshold) if purchase qualifies for first-time buyer relief
£0 to £300,000
0%
£300,001 to £500,000
5%
Rates are increased by 2 percentage points (%) for certain ‘non-resident’ transactions.
Stamp Duty Land Tax — higher rate for certain corporate transactions involving dwellings worth more than £500,000 from 20 March 2014 to 30 October 2024
Property value
Rate on whole of purchase price
Over £500,000
15%
Rates are increased by 2 percentage points (%) for certain ‘non-resident’ transactions.
Stamp Duty Land Tax — higher rate for certain corporate transactions involving dwellings worth more than £500,000 from 31 October 2024
Property value
Rate on whole of purchase price
Over £500,000
17%
Rates are increased by 2 percentage points (%) for certain ‘non-resident’ transactions.
Stamp Duty Land Tax — non-residential property on or after 17 March 2016
Purchase and Premium Transactions
Property Value
Rate (on portion of value above threshold)
£0 to £150,000
0%
£150,001 to £250,000
2%
£250,001 and over
5%
Stamp Duty Land Tax — non-residential leases on or after 17 March 2016
Net Present Value (NPV) of the lease
Rate (on portion of value above threshold)
£0 to £150,000
0%
£150,001 to £5 million
1%
Over £5 million
2%
Annual Tax on Enveloped Dwellings (ATED)
The ATED charges increase automatically each year in line with inflation (based on the previous September’s Consumer Price Index (CPI)).
The ATED annual charges will rise by 1.7% from 1 April 2025 in line with the September 2024 CPI.
The following table shows the property value band and what the revised charges will be for the 2024 to 2025 and 2025 to 2026 chargeable period.
Taxable value of the property
Charge for tax year 2024 to 2025
Charge for tax year 2025 to 2026
£500,001 to £1 million
£4,400
£4,450
£1,000,001 to £2 million
£9,000
£9,150
£2,000,001 to £5 million
£30,550
£31,050
£5,000,001 to £10 million
£71,500
£72,700
£10,000,001 to £20 million
£143,550
£145,950
Over £20 million
£287,500
£292,350
Stamp Duty and Stamp Duty Reserve Tax
No Stamp Duty is charged where the certified consideration is less than £1,000.
Stamp Duty is charged on the purchase of own shares by a company under section 690 Companies Act 2006. The SH03 form is the chargeable instrument.
Where an instrument transfers either Intellectual Property (IP) or goodwill and shares, Stamp Duty is not chargeable on the consideration that relates to the IP or goodwill. A just and reasonable apportionment must be made.
Where an instrument grants a call option, and is itself a marketable security, Stamp Duty is charged at 0.5% of the consideration given for the premium.
Transfers of, and agreements to transfer securities
Standard Rate
Higher Rate
Stamp Duty
0.5% (rounded up to next £5)
Not applicable
Stamp Duty Reserve Tax
0.5%
Not applicable
Transfers of securities to clearance services and depositary receipt issuers
Standard Rate
Higher Rate
Stamp Duty
Not applicable
1.5% (rounded up to next £5)
Stamp Duty Reserve Tax
Not applicable
1.5%
Some clearance services choose to elect into the standard 0.5% STS regime. No 1.5% charge arises on transfers to such clearance services.
Rates for transfers on sale of interests in partnerships which hold shares and certain other securities
The Stamp Duty charge is capped at 0.5% of the market value of any shares held by the partnership (less any loans secured on them), multiplied by the percentage partnership interest transferred.
Bearer instruments
Transaction
Stamp Duty
Stamp Duty Reserve Tax
Transfer of bearer instrument
1.5% (rounded up to next £5)
0.5%
Transfer of non-UK bearer instrument by usage
0.2% of market value (rounded up to next £5)
Not applicable
Transfer of deposit certificate for stock of single non-UK company
0.2% of market value (rounded up to next £5)
Not applicable
In 2015 the Companies Act 2006 was amended to prohibit the creation of bearer shares by UK companies, and all existing bearer shares had to be cancelled or converted into registered shares.
Therefore, the charge remains only on the transfer on sale of bearer shares issued by or on behalf of non-UK companies, if the transfer occurs in the UK.
It may also apply on the transfer of certain bearer debt securities.
Stamp Duty on legacy land transactions
Where an agreement for a land transaction was entered into on or before 10 July 2003, but the instrument legally completing that contract is executed after that date, then the transaction will be subject to Stamp Duty, not Stamp Duty Land Tax. However, if the contract was not substantially performed before 10 July 2003 and has been varied, or rights under it have been assigned or sub-sold after 10 July 2003, Stamp Duty Land Tax may apply on completion.
If an instrument was executed to complete a land transaction at the time of the original transfer (but is only now being presented to HMRC), then the rate in force at that time will apply.
Freehold conveyances and transfers for instruments legally completing contracts made on or after 3 July 1997
The Stamp Duty charged is rounded to the next £5. For instruments legally completing contracts made on or before 2 July 1997, the rate is 1%.
Certified transfer value
Instruments executed between 28 March 2000 and 16 March 2005
Instruments executed between 17 March 2005 and 22 March 2006
Instruments executed after 22 March 2006
£60,000 and under
nil
nil
nil
£120,000 and under
1%
nil
nil
£125,000 and under
1%
1%
nil
£250,000 and under
1%
1%
1%
£500,000 and under
3%
3%
3%
Over £500,000 or uncertified
4%
4%
4%
Leasehold property — average rent of lease
The rates in the following table are based on the average rent of the lease.
The Stamp Duty charged is rounded to the next £5.
Stamp Duty rates: leasehold — average rent
Term of lease
Rate
7 years or less — annual rent £5,000 or less
nil
7 years or less — annual rent more than £5,000
1%
7 to 35 years
2%
35 to 100 years
12%
Over 100 years
24%
Leasehold property — lease premium
The rates in the following table are based on the certified value in the transfer document.
The Stamp Duty charged is rounded to the next £5.
Stamp Duty rates: leasehold — on lease premium
Certified value Rate
Rate
£60,000, annual rent £600 or less
nil
£250,000
1%
£500,000
3%
More than £500,000
4%
Business and financial services
Corporation Tax rates
Financial year 2023 to 2024
Financial year 2024 to 2025
Financial year 2025 to 2026
Main rate
25%
25%
25%
Small profits rate
19%
19%
19%
Lower threshold
£50,000
£50,000
£50,000
Upper threshold
£250,000
£250,000
£250,000
Marginal relief standard fraction
3/200ths
3/200ths
3/200ths
North Sea oil and gas ring fence profits
See footnote
See footnote
See footnote
Marginal relief is available for companies with profits between £50,000 and £250,000. Find out to how to calculate marginal relief.
For North Sea oil and gas ring fence profits the main rate is 30% and the small profits rate is 19%. The marginal relief ring fence fraction is 11/400ths. The lower and upper limits for ring fence profits are £50,000 and £250,000 respectively.
Corporation Tax allowance and reliefs
Financial year 2024 to 2025
Financial year 2025 to 2026
Plant and machinery: main rate expenditure
18%
18%
Plant and machinery: special rate expenditure
6%
6%
Structures and Building Allowance (SBA)
3%
3%
Annual investment allowance (AIA)
£1 million
£1 million
Enhanced Capital Allowances in Freeports
100%
100%
Enhanced Capital Allowances in Investment Zones
100%
100%
Enhanced Structures and Buildings Allowance in Freeports
10%
10%
Enhanced Structures and Buildings Allowance in Investment Zones
10%
10%
50% Special Rate First Year Allowance
50%
50%
Full Expensing: 100% First Year Allowance
100%
100%
Research and Development (R&D) tax credits SME scheme deduction rate
Not applicable
Not applicable
R&D tax credits SME scheme payable credit
Not applicable
Not applicable
R&D Intensive SME deduction rate
186%
186%
R&D Intensive SME payable credit
14.5%
14.5%
R&D Intensive SME intensity ratio
30%
30%
R&D Expenditure Credit
Not applicable
Not applicable
R&D Merged Scheme expenditure credit
20%
20%
Patent Box
10%
10%
Film tax relief
25% or 34%
25% or 34%
High-end TV tax relief
25% or 34%
25% or 34%
Videogames tax relief
25% or 34%
25% or 34%
Animation tax relief
25% or 39%
25% or 39%
Children’s TV tax relief
25% or 39%
25% or 39%
Open ended investment companies and authorised unit trusts
20%
20%
From 1 January 2024 an Audio-Visual Expenditure Credit and a Video Games Expenditure Credit will be implemented. The Video Games Expenditure Credit will have a rate of 34%. Under the Audio-Visual Expenditure Credit, film and high end TV will be eligible for a rate of 34% and animation and children’s TV will be eligible for a rate of 39%.
For open ended investment companies and authorised unit trusts the applicable corporation tax rate is 20%.
Confirmation statement fee (with your first statement in the 12 month payment period)
£34
£34
£62
Voluntary strike off
£33
£44
Registration of a charge
£15
£15
£24
Reduction of capital by solvency statement
£33
Same day reduction of capital by solvency statement (upload service only)
£136
Reduction of capital by court order
£33
Administrative restoration
£468
Application to make an address unavailable for public inspection
Paper
By an individual
£30
By the company: for any list of members in hard copy form (not a long list)
£30
By the company: for any list of members filed digitally (not a long list)
£30
By the company: for a long list of members delivered on CD-ROM or DVD-ROM
£30
By the company: for a long list of members in hard copy form
£30
By a person who registers a charge
£30
Fee charged for each document suppressed.
2. Limited liability partnership (LLP) incorporation and registration fees
Limited liability partnership (LLP)
Online
Software
Paper
Incorporation of an LLP
£50
£71
Same day incorporation of an LLP
£78
LLP confirmation statement fee (with your first statement in the 12 month payment period)
£34
£34
£62
LLP change of name
£20
£30
Same day LLP change of name
£83
LLP voluntary strike off
£33
£44
Registration of a charge by an LLP
£15
£15
£24
Administrative restoration of an LLP
£468
Application to make an address unavailable for public inspection
Paper
By an individual LLP member
£30
By a person who registers a charge
£30
Fee charged for each document suppressed.
3. Overseas company incorporation and registration fees
Overseas company
Online
Software
Paper
Registration of a UK establishment of an overseas company
£71
Change of corporate name or alternative name of an overseas company
£30
Annual document processing fee payable with the overseas company accounts
£62
4. Register of Overseas Entities (ROE)
ROE service
Online
Paper
Registration of an overseas entity
£234
£467
Annual update fee
£234
£467
Application for removal
£706
£940
5. EEIG establishments and UK Economic Interest Groupings (UKEIGs) fees
EEIG establishments and UKEIGs
Paper
Registration of UK establishment of an EEIG whose official address is outside the UK under regulation 12
£71
Change of name of an UKEIG
£30
Registration of charge
£24
6. UK Societas fees
UK Societas
Paper
Conversion of a UK Societas to a PLC
£71
7. Community interest company (CIC) and other incorporation types
Community interest company (CIC)
Online
Software
Paper
Registration of a CIC in accordance with section 36 of the Companies (Audit, Investigations and Community Enterprise) Act 2004
£65
£65
£86
Conversion of a limited company to a CIC
£45
Other incorporation types
Paper
Registration of a company authorised to register in accordance with section 1040 of the Companies Act 2006
£71
Registration of an unlimited company in accordance with section 14 of the Companies Act 2006
£71
8. Application for protection
Application for protection
Fee
Section 243 application to make protected usual residential address information unavailable to credit reference agencies
£100
Section 790ZF application to make protected usual residential address information of a Person with Significant Control (PSC) unavailable to credit reference agencies
£100
Section 790ZG application requiring the registrar to refrain from disclosing secured PSC information
£100
Combined Section 790ZF and Section 790ZG application
£100
Section 790ZF application by a Section 243 beneficiary
£15
Section 243 application by a Section 790ZF beneficiary
£15
Application for higher protection in respect of an overseas company
£100
Application to make information relating to a relevant individual of an overseas entity unavailable for public inspection
£100
9. Limited partnership (LP) incorporation fees
Limited partnership (LP)
Paper
Registration of a limited partnership
£71
10. Private fund limited partnership (LP) incorporation fees
Private fund LP
Paper
Designation as a private fund LP (after the LP has been registered)
£10
11. Scottish qualifying partnership fees
Scottish qualifying partnerships
Paper
Registration of a Scottish qualifying partnership
£71
Annual fee for documents delivered during a confirmation statement period
£62
12. Scottish limited partnership fees
Scottish limited partnerships
Paper
Registration of a Scottish limited partnership
£71
Annual fee for documents delivered during a confirmation statement period
£62
13. Scottish partnership protection fees
Application for protection
Paper
Making an application under Regulations 48,49 or 50 of the Scottish Partnership PSC Regulations requiring the registrar to refrain from disclosing secure information in relation to the applicant to an individual to whom the application applies
£100
Making an application by a specified public authority under Regulation 42(2) of the Scottish Partnership PSC regulations for the registrar to determine whether to disclose URA information to that authority
£54
Making an application by a specified public authority under Regulation 1087B (2) of the Companies Act modified by Regulation 63 of the Scottish Partnership PSC regulations for the registrar to determine whether to disclose restricted DOB information to that authority
£54
14. Extractives filing service fees
Extractives filing service
Online
Registration of a report on payments to governments
£250
15. Contact centre search fees
Screen prints
Fee
Alpha index, dissolved companies, former names (per page) by email
£2
Company appointments by email
£3
Mortgage details by email
£3
Company reports
Fee
Current appointments report by email
£3
Mortgage statement by email
£3
Company record by email
£3
Document images
Fee
Copy of company document by email (after 1995)
£3
Company, limited partnership or Scottish qualifying partnership documents
Fee
Copy of company document (not a long list of members) by email
£3
Hard copy of document not on microfiche by post
£9
Certified copies
Fee
Certified copy of document by post
£15
Same day certified copy of document by post
£50
Certificates of incorporation
Fee
By post
£15
Same day certificate of Incorporation by post
£50
Additional certificate (for same company) by post
£10
Private fund limited partnerships only certificates of designation
Fee
By post
£15
Same day certificate of designation by post
£50
Additional certificate (for same company) by post
£10
Private fund limited partnerships only combined certificate of registration and designation
Fee
By post
£15
Same day certificate of designation by post
£50
Additional certificate (for same company) by post
£10
Scottish qualifying partnership
Fee
For a copy in hard form of an original document by post
£3
Copy or extract of document in hard copy in respect of the Scottish Partnerships PSC Regulations delivered by post (not same day delivery)
£15
Copy or extract of document in hard copy in respect of the Scottish Partnerships PSC Regulations delivered by same day delivery
£50
Microfiche
Fee
DVD copy of archive microfiche (up to 31 December 2002) by post
For a missing image to be made available on the filing history of a company
£3
Certified copies
Fee
Certified copy of document (up to 10 pages) by post
£15
Same day certified copy of document by post
£50
Certificates of incorporation
Fee
By post
£15
Same day certificate of Incorporation by post
£50
Additional certificate (for same company) by post
£10
Private fund limited partnerships only certificates of designation
Fee
By post
£15
Same day certificate of designation by post
£50
Additional certificate (for same company) by post
£10
Private fund limited partnerships only combined certificate of registration and designation
Fee
By post
£15
Same day certificate of designation by post
£50
Additional certificate (for same company) by post
£10
17. Extensible markup language (XML) gateway search fees
This subscription service allows third-party software to request and receive company information as data and image downloads.
Sign on
Fee
Monthly subscription (for each account)
£4.70
You can check the availability of a company name and get basic company information for free. We charge a fee for the following products.
Full search fees apply, but 15% is taken off the total monthly invoice value.
Data charges
Fee
Personal appointments
£1
Document images
Fee
Download per document
£1
18. Bulk product fees
Our bulk products offer third-parties company information as data and images for use in their own products, with initial database ‘snapshots’ and daily or weekly updates.
Access to information not on the public register
Fee
Application by specified public authority (SPA) or credit reference agency (CRA)
£54
Individual request by SPA or CRA (to access information)
These are a guide only and will be updated during the year as more information gets released from HMRC. Most have now been confirmed and a note has been added to any sections that have not been.
Updated 6th March 2024 – Employee Primary Threshold NI Rate changed from 10% to 8% and Married women’s reduced rate changed from 3.85% to 1.85%.
The following rates apply from 6th April 2024 until 5th April 2025 unless stated otherwise.
PAYE tax and Class 1 National Insurance Contributions
When you operate payroll through Shape, the software will work out the tax and national insurance contributions every time you pay your employees based on the below thresholds for 2024-2025 tax year.
Tax thresholds, rates and codes
The amount that is deducted from the employee is dependent on the employee’s tax code and how much they earn above their personal allowance.
England and Northern Ireland
The standard employee personal allowance for the 2024 to 2025 tax year is:
£242 per week
£1,048 per month
£12,570 per year
PAYE tax rate
Rate of tax
Annual earnings the rate applies to (above the PAYE threshold)
Basic tax rate
20%
Up to £37,700
Higher tax rate
40%
From £37,701 to £125,140
Additional tax rate
45%
Above £125,140
Scotland
Subject to parliamentary approval
The standard employee personal allowance for the 2024 to 2025 tax year is:
£242 per week
£1,048 per month
£12,570 per year
PAYE tax rate
Rate of tax
Annual earnings the rate applies to (above the PAYE threshold)
Starter tax rate
19%
Up to £2,306
Basic tax rate
20%
From £2,307 to £13,991
Intermediate tax rate
21%
From £13,992 to £31,092
Higher tax rate
42%
From £31,093 to £62,430
Advanced tax rate
45%
From £62,431 to £125,140
Top tax rate
48%
Above £125,141
Wales
Subject to parliamentary approval
The standard employee personal allowance for the 2024 to 2025 tax year is:
£242 per week
£1,048 per month
£12,570 per year
PAYE tax rate
Rate of tax
Annual earnings the rate applies to (above the PAYE threshold)
National Insurance deductions are only made on earnings above the lower earnings limit.
Class 1 National Insurance thresholds
2024 to 2025
Lower earnings limit
£123 per week £533 per month £6,396 per year
Primary threshold
£242 per week £1,048 per month £12,570 per year
Secondary threshold
£175 per week £758 per month £9,100 per year
Freeport upper secondary threshold
£481 per week £2,083 per month £25,000 per year
Upper secondary threshold (under 21)
£967 per week £4,189 per month £50,270 per year
Apprentice upper secondary threshold (apprentice under 25)
£967 per week £4,189 per month £50,270 per year
Veterans’ upper secondary threshold
£967 per week £4,189 per month £50,270 per year
Upper earnings limit
£967 per week £4,189 per month £50,270 per year
Class 1 National Insurance Rates
Employee (primary) contribution rates
National Insurance category letter
Earnings at or above the lower earnings limit up to and including the primary threshold
Earnings above the primary threshold up to and including the upper earnings limit
Balance of earnings above the upper earnings limit
A
0%
8%
2%
B
0%
1.85%
2%
C
nil
nil
nil
D (Investment Zone Deferment)
0%
2%
2%
E (Investment Zone MWRRE)
0%
3.85%
2%
F (Freeport)
0%
10%
2%
H (apprentice under 25)
0%
10%
2%
I (Freeport — married women and widows reduced rate)
0%
1.85%
2%
J (Deferment)
0%
2%
2%
K (Investment Zone over state pension age)
nil
nil
nil
L (Freeport — deferment)
0%
2%
2%
M (under 21)
0%
10%
2%
N (Investment Zone Standard)
0%
10%
2%
S (Freeport — over state pension age)
nil
nil
nil
V (veteran)
0%
10%
2%
Z (under 21 — deferment)
0%
2%
2%
Employer (secondary) contribution rates
National Insurance category letter
Earnings at or above the lower earnings limit up to and including the secondary threshold
Earnings above the secondary threshold up to and including the Freeport and Investment Zone upper secondary threshold
Earnings above Freeport and Investment Zone upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans
Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans
A
0%
13.8%
13.8%
13.8%
B
0%
13.8%
13.8%
13.8%
C
0%
13.8%
13.8%
13.8%
D (Investment Zone Deferment)
0%
0%
13.8%
13.8%
E (Investment Zone MWRRE)
0%
0%
13.8%
13.8%
F (Freeport)
0%
0%
13.8%
13.8%
H (apprentice under 25)
0%
0%
0%
13.8%
I (Freeport — married women and widows reduced rate)
0%
0%
13.8%
13.8%
J (Deferment)
0%
13.8%
13.8%
13.8%
K (Investment Zone over state pension age)
0%
0%
13.8%
13.8%
L (Freeport — deferment)
0%
0%
13.8%
13.8%
M (under 21)
0%
0%
0%
13.8%
N (Investment Zone Standard)
0%
0%
13.8%
13.8%
S (Freeport — state pensioner)
0%
0%
13.8%
13.8%
V (veteran)
0%
0%
0%
13.8%
Z (under 21 — deferment)
0%
0%
0%
13.8%
Class 1A National Insurance: expenses and benefits
The National Insurance Class 1A rate on expenses and benefits for 2024 to 2025 is 13.8%.
Class 1A National Insurance: termination awards and sporting testimonial payments
The National Insurance Class 1A rate on termination awards and sporting testimonial payments for 2024 to 2025 is 13.8%. More information on termination awards.
92% if your total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year 103% if your total Class 1 National Insurance for the previous tax year is £45,000 or lower
Statutory Sick Pay
The same weekly Statutory Sick Pay rate applies to all employees. However, the amount you must pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.
For tax purposes: 45 pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile For National Insurance purposes: 45 pence for all business miles
Motorcycle
24 pence for both tax and National Insurance purposes and for all business miles
Cycle
20 pence for both tax and National Insurance purposes and for all business miles
Employment Allowance
Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.
Allowance
2024 to 2025 rate
Employment Allowance
£5,000
Apprenticeship Levy
Employers and connected companies with a total annual pay bill of more than £3 million are liable to the Apprenticeship Levy, which is payable monthly. Employers who are not connected to another company or charity will have an annual allowance that reduces the amount of Apprenticeship Levy you have to pay. Apprenticeship Levy is charged at a percentage of your annual pay bill.
With a General Election looming next year, in his Autumn Statement the Chancellor made his bid for the business vote by announcing a raft of tax and spending changes that will affect UK small businesses – including major changes to National Insurance.
Jeremy Hunt promised 110 different measures to “help grow the British economy” and I’ve pulled out the most important for small businesses. Here are the key takeaways:
Major cuts to National Insurance
The Chancellor announced significant changes to National Insurance (NI), including to Class 2 and Class 4 NI, which could affect around two million self-employed people.
Compulsory Class 2 NI to be abolished
From April 2024, no one will be required to pay Class 2 self-employed NI contributions. Currently, self-employed people with profits above £12,570 pay a weekly flat rate of £3.45, but this will be scrapped from 6th April 2024. However, they will continue to receive access to contributory benefits, including the State Pension.
Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits, including the State Pension, through a National Insurance credit, but they won’t actually have to pay any National Insurance.
Those with profits under £6,725 and others who pay Class 2 NI contributions voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so.
The main rate of Class 2 NI contributions had been due to rise to £3.70 per week in April 2024. But for those paying voluntarily, the current rate of £3.45 per week will be maintained for 2024-25.
Class 4 NI to be cut by 1%
The main rate of Class 4 self-employed NI contributions is to be cut from 9% to 8% from 6th April 2024. Self-employed people will pay Class 4 NI at the new rate of 8% on profits between £12,570 and £50,270 per year, and at 2% on profits over £50,270.
Class 1 employee’s NI main rate to be cut by 2%
Class 1 NI employee’s contributions are also to be cut. From 6th January 2024, these will be reduced from 12% to 10% on earnings between £12,571 and £50,271 (and will remain at 2% on anything above that).
‘Full expensing’ to become permanent
The Chancellor announced that the ‘full expensing’ policy – announced in this year’s Spring Budget – will now become permanent. Full capital expensing allows qualifying businesses to deduct investment in certain equipment from their profits to reduce the amount of Corporation Tax payable.
Companies that invest in other assets that don’t qualify for the full 100%, such as long-life assets, also benefit from a 50% first-year allowance and it was confirmed today that this will continue.
Business rates relief help
Business rates multiplier
For 2024-25, the small business multiplier in England will be frozen for a fourth consecutive year at 49.9p, while the standard multiplier will be increased in line with the September Consumer Prices Index (CPI) to 54.6p.
Retail, hospitality, and leisure relief
The current 75% relief for eligible Retail, Hospitality and Leisure (RHL) properties is being extended for 2024-25. Around 230,000 RHL properties in England will be eligible to receive support up to a cash cap of £110,000 per business.
National Living Wage rise
The National Living Wage will increase to £11.44 from April 2024. That’s an increase of just over £1 from the current £10.42 per hour. The new rate will apply to workers aged 21 and over.
Help to tackle late payments
In a bid to tackle the late payment problems encountered by many businesses, from April 2024 any firms bidding for government contracts worth more than £5m will have to demonstrate that they pay their purchase invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.
Cash basis changes
The government is to introduce changes to cash basis accounting following a consultation launched earlier this year. Cash basis accounting is a simplified method which allows certain businesses to record their income and costs at the date the money comes in or is paid out, rather than the date displayed on an invoice they issue or bill they receive. A business including income and costs on the invoice and bill dates is referred to as using the accruals basis of accounting.
From 6th April 2024, the changes introduced by the government will mean:
cash basis is set as the default, with an opt-out for accruals (which is the reverse of the current position where accruals is the default)
the turnover threshold for businesses to use the cash basis will be removed
the £500 limit on interest deductions in the cash basis will be removed
restrictions on using relief for losses made in the cash basis will be removed
The Autumn Statement also references the outcome of the government’s review into the impact of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) on small businesses, which was published today.
This includes measures that simplify the requirements for quarterly updates, and remove the need to provide an End of Period Statement. The changes will take effect when MTD for ITSA is introduced in April 2026.
To learn more about all the changes announced in the Autumn Statement, you can read the full report on the government’s website.
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