Comprehensive Guide to UK Taxes: 2024-2025
The United Kingdom’s tax system is one of the most extensive and nuanced globally, designed to fund public services, promote economic stability, and address environmental concerns. From income-based levies to environmental taxes, each type of tax serves a specific purpose within the nation's fiscal framework. This comprehensive guide aims to demystify the complexities of UK taxation for the 2024-25 tax year, providing detailed insights into rates, allowances, and the rationale behind each tax.
This guide covers 33 distinct taxes and levies, organized to provide clarity on their purpose, application, and impact. Each section includes detailed tables and explanations, ensuring a clear understanding of the tax rates and reliefs applicable for the tax year. The taxes are categorized broadly as income-based, consumption-based, environmental, property-related, and industry-specific, reflecting the diverse ways the UK government collects revenue.
The discussion begins with familiar taxes such as Income Tax, Value Added Tax (VAT), and Corporation Tax, delving into their structures and recent updates. It also highlights less commonly discussed levies like the Tonnage Tax and Plastic Packaging Tax, which are tailored to specific sectors or environmental goals. Emerging concerns, such as digital activities and sustainability, are addressed through taxes like the Digital Services Tax (DST) and Aggregates Levy.
Environmental sustainability is a recurring theme, with taxes such as the Carbon Price Support (CPS), Climate Change Agreement (CCA) Levy, and Landfill Tax incentivizing greener practices. Property taxes like Stamp Duty Land Tax (SDLT) and Annual Tax on Enveloped Dwellings (ATED) reflect efforts to regulate housing markets and increase ownership transparency.
Additionally, industry-specific taxes like the Bank Levy, Patent Box, and Research and Development (R&D) Tax Credits underscore the government’s role in balancing fiscal responsibility with economic competitiveness. Reliefs and exemptions across the tax system demonstrate the UK’s commitment to incentivizing innovation, investment, and fairness.
This guide is an invaluable resource for taxpayers, businesses, and policymakers seeking a comprehensive understanding of the UK tax system. Whether you are navigating property transactions, managing a business, or planning for the future, this guide provides the tools to make informed financial decisions for the 2024-25 tax year.
Here is a comprehensive, alphabetically ordered list of all the taxes explained below:
Employment-Related National Insurance Contributions (Class 1A and 1B NICs)
Excise Duties (Fuel, Alcohol, and Tobacco)
Gambling Duties (General Betting Duty, Pool Betting Duty, Remote Gaming Duty, Machine Games Duty)
Local Business Rates (Non-Domestic Rates)
Aggregates Levy
Category | Rate |
Tax on extraction of aggregates (e.g., sand, gravel) | £2.10 per tonne |
Aggregates Levy
The Aggregates Levy is an environmental tax imposed in the United Kingdom on the commercial exploitation of rock, sand, and gravel. Introduced in 2002, the levy aims to reduce the environmental damage caused by quarrying and to encourage the use of recycled and secondary materials in construction. This aligns with the broader goals of promoting sustainability and reducing the carbon footprint of construction industries.
The tax is charged at a flat rate of £2.10 per tonne for 2024-25. It applies to aggregate materials extracted in the UK or imported into the country, whether sold commercially or used in construction. Aggregates exported from the UK are exempt from the levy, as are materials that qualify as waste or are used in specific exempt applications, such as agricultural or industrial processes where aggregates serve a non-construction purpose.
Revenue generated from the Aggregates Levy is used to fund environmental programs and support industries transitioning to greener practices. While the rates remain relatively stable, there are occasional adjustments based on inflation or environmental policy changes. Businesses that handle aggregates must register with HM Revenue & Customs (HMRC) and maintain accurate records of the materials to calculate their levy obligations.
This tax encourages businesses to innovate in material recycling and opt for environmentally friendly alternatives. It also incentivizes companies to reduce waste and minimize reliance on newly quarried materials, promoting the UK's commitment to sustainability and environmental conservation.
Air Passenger Duty (APD)
Destination Band | Rate for 2024-25 | Rate for 2023-24 |
Band A (0-2,000 miles) | £14 (economy) / £87 (other) | £13 (economy) / £84 (other) |
Band B (2,001-5,500 miles) | £87 (economy) / £191 (other) | £84 (economy) / £188 (other) |
Band C (5,501+ miles) | £97 (economy) / £200 (other) | £91 (economy) / £191 (other) |
Air Passenger Duty (APD)
Air Passenger Duty (APD) is a tax levied on passengers flying out of UK airports. Introduced in 1994, it aims to reduce air travel emissions and raise government revenue. APD rates vary based on the travel class and destination, divided into Band A (0–2,000 miles), Band B (2,001–5,500 miles), and Band C (over 5,501 miles).
For the 2024-25 tax year, economy class rates are £14, £87, and £97 for Bands A, B, and C, respectively. Higher classes incur additional charges. Exemptions apply to children under two years old, flights from Scottish Highlands and Islands, and certain connecting flights. Revenue supports government programs and environmental initiatives. Airlines must calculate and pay the tax based on passenger numbers and ticket classes.
Annual Tax on Enveloped Dwellings (ATED)
Taxable Value | 2024-25 Charge | 2023-24 Charge |
£500,001 - £1,000,000 | £4,400 | £4,150 |
£1,000,001 - £2,000,000 | £9,000 | £8,450 |
£2,000,001 - £5,000,000 | £30,550 | £28,650 |
£5,000,001 - £10,000,000 | £71,500 | £67,050 |
£10,000,001 - £20,000,000 | £143,550 | £134,550 |
£20,000,001+ | £287,500 | £269,450 |
Applies if market value exceeds £500,000. Valuation date: 1 April 2022.
Annual Tax on Enveloped Dwellings (ATED)
The ATED is a property tax targeting companies that own residential properties valued at over £500,000. Introduced in 2013, it discourages the use of corporate structures to avoid taxes on high-value homes. Rates for 2024-25 start at £4,400 for properties valued between £500,001–£1 million and increase to £287,500 for properties exceeding £20 million.
Exemptions apply to properties used for commercial purposes, such as rental or development, provided companies claim relief through annual returns. Failure to pay ATED or file timely returns can lead to penalties. This tax helps address housing affordability and increases transparency in property ownership.
Apprenticeship Levy
Category | Rate 2024-25 | Notes |
Levy | 0.5% | Charged on pay bills > £3m/year |
Apprenticeship Levy
Introduced in 2017, the Apprenticeship Levy funds apprenticeship training in England. Employers with annual pay bills exceeding £3 million must pay 0.5% of their payroll as the levy. An allowance of £15,000 reduces the amount payable. Employers can access their contributions through the Apprenticeship Service to fund training programs.
Unused funds expire after two years, promoting prompt utilization. Small businesses not subject to the levy may still receive government co-funding for apprenticeship training. This tax supports workforce skill development and addresses skills shortages in the UK economy.
Bank Levy
Category | Rate |
Short-term liabilities | 0.1% |
Long-term liabilities | 0.05% |
Bank Levy
The Bank Levy is a tax on the balance sheets of UK-based banks, introduced after the 2008 financial crisis to promote financial stability. It applies to banks with global liabilities exceeding £20 billion, with rates of 0.1% for short-term liabilities and 0.05% for long-term liabilities in 2024-25.
Exemptions apply to retail deposits insured by the Financial Services Compensation Scheme. This tax encourages banks to maintain safer funding structures and contributes to the government’s financial stability programs.
Capital Gains Tax
Exemptions
Exemption | 2024-25 | 2023-24 |
Annual exemption for individuals | £3,000 | £6,000 |
Annual exemption for trusts (generally) | £1,500 | £3,000 |
Chattels max gain (5/3 x proceeds - exempt amount) | £6,000 | £6,000 |
Rates
Taxpayer Type | Rate to 29 October 2024 | Rate from 30 October 2024 | 2023-24 Rate |
Individuals: Basic rate | 10% | 18% | 10% |
Individuals: Higher rate | 20% | 24% | 20% |
Individuals: Basic rate residential gains | 18% | 24% | 18% |
Individuals: Higher rate residential gains | 24% | 24% | 28% |
Individuals: Basic rate carried interest gains | 18% | 24% | 18% |
Individuals: Higher rate carried interest gains | 28% | 28% | 28% |
Trusts | 20% | 24% | 20% |
Trusts: Additional surcharge (residential property gains) | 4% (to 29 Oct) | N/A | 8% |
Companies | See Corporation Tax |
Reliefs
Relief | 2024-25 | 2023-24 |
Business Asset Disposal Relief (qualifying lifetime limit) | £1,000,000 | £1,000,000 |
Investors' Relief (qualifying lifetime limit): | ||
- To 29 October 2024 | £10,000,000 | £10,000,000 |
- From 30 October 2024 | £1,000,000 | N/A |
Note: Both reliefs result in CGT at 10% on qualifying gains.
Capital Gains Tax (CGT)
Capital Gains Tax (CGT) applies to profits made when selling or disposing of certain assets, such as property, shares, or businesses. The tax rate varies based on income: 10% for basic-rate taxpayers and 20% for higher-rate taxpayers in 2024-25. Residential property gains incur higher rates: 18% for basic-rate taxpayers and 28% for higher-rate taxpayers.
Exemptions include gains from selling a primary residence, personal possessions under £6,000, and ISAs. Annual exemptions for individuals are £3,000 for 2024-25, down from £6,000 in the previous year. CGT incentivizes asset retention and funds public expenditures.
Carbon Price Support (CPS)
Fuel Type | Rate 2024-25 (per tonne of CO2) | Rate 2023-24 (per tonne of CO2) |
Gas | £18 | £18 |
Coal | £18 | £18 |
Other fossil fuels | £18 | £18 |
Carbon Price Support (CPS)
The Carbon Price Support (CPS) tax targets fossil fuel use in electricity generation to reduce greenhouse gas emissions. For 2024-25, the rate is £18 per tonne of CO2 emitted. This tax complements the EU Emissions Trading System and promotes renewable energy adoption.
Energy companies pay CPS based on emissions, encouraging investment in cleaner technologies. Revenue funds environmental initiatives and supports the UK’s climate goals.
Climate Change Agreement (CCA) Levy
Category | Rate | Notes |
Reduced CCL rates | Requires CCA for eligibility | For energy-intensive industries |
Climate Change Levy (CCL)
Category | Rate 2024-25 per unit | Rate 2023-24 per unit |
Electricity | £0.00775 | £0.00775 |
Natural gas | £0.00465 | £0.00465 |
Coal | £0.01500 | £0.01500 |
Climate Change Agreement (CCA) Levy
The Climate Change Agreement (CCA) Levy provides reduced rates on the Climate Change Levy (CCL) for energy-intensive industries that commit to improving energy efficiency. It is designed to balance environmental goals with economic competitiveness. Eligible businesses must enter into CCAs and meet energy-saving targets to benefit from reduced CCL rates.
For 2024-25, the CCL rates include £0.00775 per kWh for electricity and £0.00465 per kWh for natural gas. Businesses failing to meet their CCA targets may lose their discount. This levy aligns with the UK’s efforts to meet international climate agreements by incentivizing sustainable practices.
Corporation Tax
Category | 2024-25 | 2023-24 |
Small profits rate (profits < lower limit) | 19% | 19% |
Main rate (profits > upper limit) | 25% | 25% |
Marginal relief lower limit | £50,000 | £50,000 |
Marginal relief upper limit | £250,000 | £250,000 |
Marginal relief standard fraction | 3/200 | 3/200 |
Effective marginal rate | 26.5% | 26.5% |
s.455 tax on loans to participators | 33.75% | 33.75% |
Corporation Tax
Corporation Tax applies to profits generated by UK-based companies. For 2024-25, the main rate remains 25% for profits exceeding £250,000, while smaller profits below £50,000 are taxed at the lower rate of 19%. A marginal relief rate of 26.5% applies to profits between these thresholds.
Businesses benefit from deductions like capital allowances and research and development (R&D) tax credits, which can significantly reduce taxable profits. The tax also includes sector-specific reliefs, such as the Patent Box and creative industries reliefs. Corporation Tax is a vital source of government revenue.
Local Council Tax
Property Band | Annual Rate (2024-25) | Notes |
Band A (lowest value) | Varies by location | Determined by local councils |
Band H (highest value) | Varies by location | Determined by local councils |
Council Tax
Council Tax is a local property tax levied on households to fund public services like waste collection and policing. Rates depend on property value bands (A to H) set by local councils. Discounts apply for single occupants, low-income households, and exempt properties.
For 2024-25, rates vary widely by region. Households can challenge band assessments to reduce liability. Council Tax remains a critical revenue source for local governments.
Customs Duty and Import VAT
Category | Notes |
Customs Duty | Varies by product and origin, based on WTO tariffs |
Import VAT | 20% on most goods |
Customs Duty
Customs Duty is a tax on goods imported into the UK from outside its customs territory. Rates depend on the product type, value, and origin, as outlined in the UK Global Tariff. For instance, agricultural goods and luxury items often face higher tariffs, while raw materials might be exempt.
Customs Duty ensures fair competition for domestic industries and generates revenue for border management. Businesses must declare imports accurately and comply with HMRC guidelines to avoid penalties. This tax is central to international trade regulation.
Digital Services Tax (DST)
Category | Rate 2024-25 | Notes |
DST on UK digital revenues | 2% | Applies to companies with revenue > £25m/year |
Digital Services Tax (DST)
The Digital Services Tax (DST) is levied on the UK revenues of large digital businesses, such as social media platforms and online marketplaces. Introduced in 2020, the tax applies to companies generating over £25 million annually in UK revenues, with a global revenue threshold of £500 million. The DST rate is 2%.
The tax aims to address the challenge of taxing digital activities and ensures that multinational corporations contribute fairly. While intended as a temporary measure, the DST reflects global debates on equitable taxation in the digital economy.
Diverted Profits Tax
Category | Rate | Notes |
Tax on profits artificially diverted from the UK | 25% | Higher than corporation tax rate |
Diverted Profits Tax
The Diverted Profits Tax targets multinational companies that artificially divert profits from the UK to avoid Corporation Tax. The tax rate is 25%, higher than the Corporation Tax rate, to discourage profit-shifting.
Applicable scenarios include exploiting tax mismatches or avoiding permanent establishment status in the UK. This tax strengthens anti-avoidance measures and ensures companies pay a fair share.
Employment-Related Taxes - Class 1A and 1B NICs
Category | Rate | Notes |
NICs on benefits in kind | 13.8% | Payable by employers |
National Insurance Contributions (NICs)
NICs are contributions made by employees, employers, and self-employed individuals to fund state benefits like pensions and healthcare. Rates for 2024-25 include:
Class 1: Employee rate is 12% (earnings above £12,570/year) and 2% on higher earnings.
Class 1 Employer NICs: 13.8% on earnings above £9,100/year.
Class 4: Self-employed individuals pay 9% (profits above £12,570/year) and 2% on higher profits.
NICs play a crucial role in funding the UK’s welfare system.
Employers pay Class 1A and 1B NICs on employee benefits in kind and certain earnings. For 2024-25, the rate remains 13.8% of the taxable value of benefits provided. This tax funds public services like healthcare and pensions.
Employers must report taxable benefits through the P11D form and ensure accurate calculations to avoid penalties. This NIC class complements income tax obligations and ensures employer contributions to social welfare.
Excise Duties
Fuel
Category | Rate 2024-25 | Rate 2023-24 |
Petrol | £0.5295 per litre | £0.5295 per litre |
Diesel | £0.5295 per litre | £0.5295 per litre |
Biodiesel | £0.1137 per litre | £0.1137 per litre |
Alcohol
Category | Rate 2024-25 | Rate 2023-24 |
Beer | £19.08 per hectolitre/% of alcohol | £19.08 per hectolitre/% of alcohol |
Wine (up to 15% ABV) | £2.23 per litre | £2.23 per litre |
Spirits | £31.64 per litre of pure alcohol | £31.64 per litre of pure alcohol |
Tobacco
Category | Rate 2024-25 | Rate 2023-24 |
Cigarettes | 16.5% of retail price + £5.26 per pack of 20 | Same |
Hand-rolling tobacco | £7.85 per 30g | Same |
Excise Duties
Excise Duties apply to specific goods like alcohol, tobacco, and fuel. For 2024-25, the key rates include:
Petrol and diesel: £0.5295 per litre
Beer: £19.08 per hectolitre per % of alcohol
Cigarettes: 16.5% of retail price + £5.26 per pack of 20
These duties aim to reduce consumption of harmful products, generate revenue, and address environmental concerns. Excise tax revenues fund public services and health initiatives.
Financial Services Taxes
Bank Levy
Liability Type | Rate | Notes |
Short-term liabilities | 0.1% | Payable by UK-based banks |
Long-term liabilities | 0.05% |
Bank Levy
The Bank Levy is a tax on the balance sheets of UK-based banks, introduced after the 2008 financial crisis to promote financial stability. It applies to banks with global liabilities exceeding £20 billion, with rates of 0.1% for short-term liabilities and 0.05% for long-term liabilities in 2024-25.
Exemptions apply to retail deposits insured by the Financial Services Compensation Scheme. This tax encourages banks to maintain safer funding structures and contributes to the government’s financial stability programs.
Flat Rate Scheme VAT
Category | 2024-25 | 2023-24 |
Taxable turnover upper limit for joining | £150,000 | £150,000 |
Anniversary test: Leave if total income (including exempt) > | £230,000 | £230,000 |
Stay if total income in next 12 months ≤ | £191,500 | £191,500 |
Flat Rate Scheme VAT
The Flat Rate Scheme simplifies VAT reporting for small businesses with taxable turnover below £150,000. Businesses pay a fixed percentage of their gross turnover, depending on their industry, rather than calculating VAT on every transaction. For example, a catering business might pay 12.5%, while a consultancy firm pays 14.5%.
This scheme reduces administrative burdens but may not be cost-effective for all businesses. It incentivizes compliance and facilitates participation in the VAT system for smaller firms.
Gambling Duties
Tax Type | Description | Rate |
General Betting Duty | Profits from fixed-odds betting | 15% of gross gambling profits |
Pool Betting Duty | Total stakes placed in pool betting | 15% |
Remote Gaming Duty | Profits from online gaming | 21% of gross gaming profits |
Machine Games Duty | Based on machine category: | 5%, 20%, or 25% depending on stakes/prizes |
Gambling Duties
Gambling Duties include taxes on betting, gaming, and lottery activities. The rates for 2024-25 are:
General Betting Duty: 15% of gross profits.
Remote Gaming Duty: 21% of gross profits.
Machine Games Duty: 5%, 20%, or 25%, depending on stakes and prizes.
These taxes generate significant revenue and ensure the gambling industry contributes to public funding. Businesses must register with HMRC and maintain accurate records of taxable activities.
Inheritance Tax
Exemptions and Nil Rates
Exemption | 2024-25 | 2023-24 |
Nil rate band | £325,000 | £325,000 |
Residence nil rate band maximum | £175,000 | £175,000 |
Residence nil rate band taper threshold | £2,000,000 | £2,000,000 |
Maximum nil rate band (including transfers) | £1,000,000 | £1,000,000 |
Rates
Rate Type | Rate 2024-25 | Rate 2023-24 |
Chargeable lifetime transfers | 20% | 20% |
Transfers on death (excess over nil rate band) | 40% | 40% |
Transfers on death (10% or more to charity) | 36% | 36% |
Taper Relief on IHT (Gifts Within Seven Years of Death)
Time Before Death | Relief (%) |
0 - < 3 years | 0% |
3 - < 4 years | 20% |
4 - < 5 years | 40% |
5 - < 6 years | 60% |
6 - < 7 years | 80% |
More than 7 years | Exempt |
Exemptions and Reliefs
Exemption Type | 2024-25 | 2023-24 |
Gifts to UK-domiciled spouse (or non-dom spouse with election) | Unlimited | Unlimited |
Gifts to non-domiciled spouse (additional) | £325,000 | £325,000 |
Annual gift exemption (per donor) | £3,000 | £3,000 |
Small gifts exemption (per donee) | £250 | £250 |
Wedding gift (from parent) | £5,000 | £5,000 |
Wedding gift (from grandparent) | £2,500 | £2,500 |
Wedding gift (from others) | £1,000 | £1,000 |
Regular gifts out of income | Unlimited | Unlimited |
Gifts to charities | Unlimited | Unlimited |
Reliefs
Relief Type | Relief 2024-25 | Relief 2023-24 |
Business Property Relief: Controlling interest in listed company | 50% relief | 50% relief |
Business Property Relief: Personal assets used by partnership/company you control | 50% relief | 50% relief |
Business Property Relief: Interest in a trading business | 100% relief | 100% relief |
Business Property Relief: Shares in unquoted trading company (including AIM-listed) | 100% relief | 100% relief |
Agricultural Property Relief: Agricultural value | 100% relief generally | 100% relief generally |
Agricultural Property Relief: Certain cases | 50% relief | 50% relief |
Inheritance Tax on Trusts
Category | Rate | Notes |
10-year periodic charge | 6% of trust value above nil-rate band | Applies every 10 years |
Inheritance Tax (IHT)
Inheritance Tax (IHT) applies to the estate of a deceased individual, including property, money, and possessions. The standard rate is 40% on the portion of an estate exceeding the nil-rate band of £325,000 for 2024-25. Additional reliefs include the Residence Nil-Rate Band of £175,000, which applies to direct descendants inheriting a home.
Gifts made during the donor’s lifetime are exempt if given more than seven years before death. Otherwise, taper relief may reduce the tax based on the time elapsed. Gifts to spouses, civil partners, or charities are generally exempt. IHT incentivizes wealth distribution during one’s lifetime and supports government revenues.
Insurance Premium Tax (IPT)
Category | Rate 2024-25 | Rate 2023-24 |
Standard rate | 12% | 12% |
Higher rate (e.g., travel insurance) | 20% | 20% |
Insurance Premium Tax (IPT)
Insurance Premium Tax (IPT) is charged on most insurance policies sold in the UK, such as motor, home, and health insurance. For 2024-25, the standard rate is 12%, while the higher rate of 20% applies to specific insurances like travel and warranty.
IPT ensures that insurers contribute to public funding without taxing essential medical or life insurance. It generates significant government revenue and minimizes excessive insurance premium increases by maintaining stable rates.
Landfill Tax
Category | Rate 2024-25 per tonne | Rate 2023-24 per tonne |
Standard rate | £98.60 | £98.60 |
Lower rate (inert waste) | £3.15 | £3.15 |
Landfill Tax
Landfill Tax is an environmental tax levied on waste disposal at landfill sites. For 2024-25, the standard rate is £98.60 per tonne, and the lower rate for inert waste is £3.15 per tonne. The tax incentivizes recycling and waste reduction by making landfill disposal costly.
Landfill operators must register with HMRC and pass the cost onto waste producers. Revenue supports environmental projects and funds waste management reforms in line with the UK’s sustainability goals.
Local Business Rates (Non-Domestic)
Category | Rate 2024-25 | Notes |
Multiplier (England, small businesses) | 49.9p per £1 of rateable value | Subject to local reliefs |
Multiplier (England, standard) | 51.2p per £1 of rateable value | Subject to local reliefs |
Local Business Rates (Non-Domestic Rates)
Business rates apply to non-domestic properties, such as shops, offices, and warehouses. For 2024-25, the small business multiplier is 49.9p per £1 of rateable value, while the standard multiplier is 51.2p per £1 of rateable value.
Reliefs are available for small businesses, rural shops, and enterprises in enterprise zones. Rates are reassessed periodically, reflecting property market changes. This tax provides essential funding for local governments.
Patent Box and R&D
Category | 2024-25 | 2023-24 |
Patent box effective rate | 10% | 10% |
R&D capital expenditure relief | 100% | 100% |
R&D enhanced deduction for SMEs | N/A | 186% |
R&D tax credit rate (surrendable loss for SMEs) | N/A | 10% |
R&D large company credit (RDEC) | N/A | 20% |
R&D merged scheme (from April 2024) | 20% | N/A |
R&D intensive SME payable credit (>40% expenditure) | 14.5% | 14.5% |
Patent Box
The Patent Box regime allows companies to pay a reduced Corporation Tax rate of 10% on profits derived from patented inventions or intellectual property. This incentive applies to UK-registered patents and equivalent rights in other countries.
For 2024-25, eligible profits include royalties, sales of patented products, and income from licensing. The Patent Box supports innovation and makes the UK a competitive hub for research-intensive industries.
Pension Scheme Levy
Category | Rate | Notes |
Annual levy on pension schemes | Varies by size of scheme | Used for regulatory costs |
Tax Charges on Payments from Registered Pension Schemes
Type of Charge | Rates |
Authorised Lump Sums | Lump sums are taxed at your marginal rate on anything above £268,275 |
Annual Allowance Charge | Marginal rate of Income Tax |
Unauthorised Payments Charge | 40% |
Unauthorised Payments Surcharge | 15% |
Overseas Transfer Charge | 25% |
Short Service Refund Lump Sum Charge | 20% on first £20,000; 50% on amount over £20,000 |
Special Lump Sum Death Benefits Charge | 45% |
Authorised Surplus Payments Charge | 25% |
Scheme Sanction Charge | 15% to 40% |
Pension Scheme Levy
The Pension Scheme Levy is a regulatory charge imposed on pension schemes to cover the cost of managing the Pension Protection Fund (PPF). The levy depends on the scheme’s funding level, risk, and size.
For 2024-25, the PPF levy ensures that members of defined benefit pension schemes are compensated in cases of employer insolvency. It promotes confidence in the UK pension system and protects retirement savings.
Plastic Packaging Tax
Category | Rate 2024-25 | Notes |
Plastic packaging with less than 30% recycled content | £210.82 per tonne | Applies to manufacturers and importers |
Plastic Packaging Tax
The Plastic Packaging Tax targets manufacturers and importers of plastic packaging with less than 30% recycled content. For 2024-25, the rate is £210.82 per tonne.
This tax encourages the use of sustainable materials, reduces waste, and aligns with broader environmental goals. Businesses must register with HMRC if they produce or import more than 10 tonnes of plastic packaging annually.
R&D Tax Credits
Category | 2024-25 | 2023-24 |
R&D capital expenditure relief | 100% | 100% |
R&D enhanced deduction for SMEs | N/A | 186% |
R&D tax credit rate (surrendable loss for SMEs) | N/A | 10% |
R&D large company credit (RDEC) | N/A | 20% |
R&D merged scheme (from April 2024) | 20% | N/A |
R&D intensive SME payable credit (>40% expenditure) | 14.5% | 14.5% |
Research and Development (R&D) Tax Credits
R&D Tax Credits provide relief for companies investing in innovation. For 2024-25, small or medium-sized enterprises (SMEs) can claim a 14.5% payable credit if qualifying R&D expenses exceed 40% of total costs.
Large companies use the R&D Expenditure Credit (RDEC), offering a 20% credit on qualifying expenditure. These incentives foster innovation and support the UK’s competitive position in global markets.
Soft Drinks Industry Levy (SDIL)
Sugar Content | Rate 2024-25 | Rate 2023-24 |
>5g sugar per 100ml | £0.24/litre | £0.24/litre |
>8g sugar per 100ml | £0.18/litre | £0.18/litre |
Soft Drinks Industry Levy (SDIL)
The SDIL, or "sugar tax," applies to soft drinks with added sugar. For 2024-25, the rates are:
18p per litre for drinks containing 5–8g of sugar per 100ml.
24p per litre for drinks with more than 8g of sugar per 100ml.
The levy encourages manufacturers to reformulate products and reduce sugar content, promoting public health and addressing obesity concerns.
Stamp Duty
General Stamp Duty
Type | 2024-25 Rate | 2023-24 Rate |
Newly issued shares | 0% | 0% |
Stocks and marketable securities (consideration > £1,000) | 0.5% | 0.5% |
Stamp Duty Land Tax: Residential Property
Property Value Band | 2024-25 Rate | 2023-24 Rate |
First-time buyers (< £625,000): | ||
£0 - £425,000 | 0% | 0% |
£425,001 - £625,000 | 5% | 5% |
Cost > £625,000 (normal rates apply): | ||
£0 - £250,000 | 0% | 0% |
£250,001 - £925,000 | 5% | 5% |
£925,001 - £1,500,000 | 10% | 10% |
£1,500,001+ | 12% | 12% |
Additional Charges
Charge Type | 2024-25 Rate | 2023-24 Rate |
Supplement for second homes/buy-to-let | 3% | 3% |
Consideration < | £40,000 | £40,000 |
Higher rate for non-natural persons | 15% (> £500,000) | 15% (> £500,000) |
Surcharge for non-UK residents | 2% | 2% |
Stamp Duty Land Tax: Non-Residential or Mixed Property
Property Value Band | 2024-25 Rate | 2023-24 Rate |
£0 - £150,000 | 0% | 0% |
£150,001 - £250,000 | 2% | 2% |
£250,001+ | 5% | 5% |
Qualifying purchases in Freeport tax sites and Investment Zones are eligible for full relief.
Stamp Duty Land Tax (SDLT)
SDLT applies to property purchases in England and Northern Ireland. For 2024-25:
Residential properties: No tax on the first £250,000, then rates rise to 12% for values above £1.5 million.
Non-residential properties: Rates start at 0% for the first £150,000, rising to 5% for higher values.
Additional charges apply to second homes and non-UK residents. SDLT generates significant revenue and regulates property market activity.
Stamp Duty Reserve Tax (SDRT)
Category | Rate | Notes |
Securities transfers through CREST | 0.5% of transaction value | Applies to electronic settlements |
Stamp Duty Reserve Tax (SDRT)
SDRT is a tax on the electronic transfer of securities. The rate is 0.5% of the transaction value, and it applies to shares purchased via the CREST system. SDRT complements the traditional Stamp Duty on paper transactions, simplifying tax compliance in financial markets.
Structures and Buildings Allowance (SBA)
SBA Type | 2024-25 | 2023-24 |
Structures and Buildings Allowance | 3% | 3% |
Enhanced SBA for Freeports | 10% | 10% |
Enhanced SBA for Investment Zones | 10% | 10% |
Structures and Buildings Allowance (SBA)
The SBA allows businesses to deduct 3% annually of the construction or renovation costs of non-residential buildings from taxable profits. Enhanced rates of 10% apply to properties in Freeports or Investment Zones. This allowance incentivizes investment in infrastructure and commercial properties.
Tonnage Tax
Category | Description |
Shipping profits tax regime | Based on tonnage of ships, not profits |
Tonnage Tax
The Tonnage Tax applies to shipping companies, allowing them to calculate taxable profits based on the net tonnage of their fleet rather than actual profits. This simplifies tax compliance and supports the UK’s shipping industry competitiveness.
VAT
Registration and Deregistration Thresholds
Threshold Type | 2024-25 | 2023-24 |
Registration threshold (taxable turnover, excluding exempt) | £90,000 | £85,000 |
Deregistration threshold | £88,000 | £83,000 |
Rates
Rate Type | 2024-25 | 2023-24 |
Standard Rate | 20% | 20% |
Reduced Rate | 5% | 5% |
Zero Rate | 0% | 0% |
Fractions
Rate Type | Fraction 2024-25 | Fraction 2023-24 |
Standard Rate | 1/6 | 1/6 |
Reduced Rate | 1/21 | 1/21 |
Cash Accounting & Annual Accounting
Category | 2024-25 | 2023-24 |
Taxable turnover upper limit for joining | £1,350,000 | £1,350,000 |
Taxable turnover exit threshold | £1,600,000 | £1,600,000 |
Flat Rate Scheme
Category | 2024-25 | 2023-24 |
Taxable turnover upper limit for joining | £150,000 | £150,000 |
Anniversary test: Leave if total income (including exempt) > | £230,000 | £230,000 |
Stay if total income in next 12 months ≤ | £191,500 | £191,500 |
Flat Rate Scheme: Limited Cost Trader (LCT)
Category | 2024-25 | 2023-24 |
Spend on relevant goods in the quarter < | Total income × 2% | Total income × 2% |
OR less than | £250 | £250 |
LCT rate | 16.5% | 16.5% |
Partial Exemption De Minimis
Condition Type | 2024-25 | 2023-24 |
Input VAT attributable to exempt supplies, on average < | £625/month | £625/month |
Proportion of total input VAT ≤ | 50% | 50% |
Value Added Tax (VAT)
VAT is a consumption tax charged on goods and services at standard (20%), reduced (5%), or zero rates. Businesses must register for VAT if their taxable turnover exceeds £90,000 in 2024-25. Exemptions apply to certain sectors, such as healthcare and education. VAT remains a vital source of UK government revenue.
Disclaimer
The information provided in this article is for general informational purposes only and does not constitute professional advice. While every effort has been made to ensure the accuracy and completeness of the tax rates and details for the 2024-2025 tax year, "Pro Tax Accountant" accepts no responsibility for any errors or omissions. Tax regulations are subject to change, and the information herein may not reflect the most current developments.
Readers are advised to consult with a qualified tax professional or accountant for advice tailored to their specific circumstances. "Pro Tax Accountant" shall not be liable for any loss or damage arising from reliance on the information contained in this article, whether direct, indirect, or consequential.
For precise guidance and updates on UK tax laws, please refer to official sources such as HM Revenue & Customs (HMRC) or contact our team of experienced tax advisors.