by web@dmin
15 April 2025 
📊 UK Tax Rates, Thresholds & Allowances for the Self-Employed: 2025/26 Guide
If you’re self-employed, a sole trader, or running your own limited company in the UK, understanding how much tax you owe is essential. This comprehensive 2025/26 tax guide explains everything you need to know — from income tax to National Insurance contributions (NICs) and dividend tax — all compared to the 2024/25 tax year.
🗓️ When Do UK Tax Rates Change?
UK tax rates usually change at the start of the tax year, which runs from 6 April to 5 April annually. This guide focuses on changes for 2025/26 and what’s staying the same.
👥 Personal Allowance 2025/26: What Income Is Tax-Free?
- Tax-Free Income: £12,570
- Same as 2024/25
- Applies across all income sources (employment, self-employment, property, dividends)
⚠️ High-Income Reduction Rule: If your income exceeds £100,000, your personal allowance reduces by £1 for every £2 earned. It disappears completely at £125,140.
💷 Income Tax Rates for 2025/26 (England, Wales & NI)
| Tax Band | 2024/25 Threshold | 2025/26 Threshold | Tax Rate |
|---|---|---|---|
| Personal Allowance | £0 – £12,570 | £0 – £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | £50,271 – £125,140 | 40% |
| Additional Rate | £125,140+ | £125,140+ | 45% |
Example: If you earn £60,000:
- £12,570 is tax-free
- £37,700 taxed at 20%
- £9,730 taxed at 40%
🏴 Scottish Income Tax Bands 2025/26
| Band | Income Threshold | Rate |
|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% |
| Starter Rate | £12,571 – £15,397 | 19% |
| Basic Rate | £15,398 – £27,491 | 20% |
| Intermediate Rate | £27,492 – £43,662 | 21% |
| Higher Rate | £43,663 – £75,000 | 42% |
| Advanced Rate | £75,001 – £125,140 | 45% |
| Top Rate | £125,140+ | 48% |
💼 National Insurance Contributions (NICs) 2025/26
Employees (Class 1 – Primary)
- £6,500 (LEL): 0%
- £12,570 (Primary Threshold): 8%
- Over £50,270: 2%
Employers (Class 1 – Secondary)
- Threshold: £5,000 @ 15%
- Employment Allowance: Up to £10,500
📌 Note: Class 1A/1B NICs apply to Benefits in Kind. Paper P11Ds are being phased out from 2026.
Self-Employed (Class 4)
- Up to £6,845: 0%
- £12,570 – £50,270: 6%
- Over £50,270: 2%
💸 Dividend Tax Rates 2025/26
- Dividend Allowance: £500
- Basic Rate: 8.75%
- Higher Rate: 33.75%
- Additional Rate: 39.35%
✅ You can use both the Personal Allowance and the Dividend Allowance.
🏠 Capital Gains Tax (CGT) 2025/26
Exempt Amounts
- Individuals: £3,000
- Trusts: £1,500
Rates
| Asset Type | Basic Rate | Higher Rate |
|---|---|---|
| Residential Property | 18% | 24% |
| Other Assets | 10% | 20% |
💡 Tip: You may qualify for Business Asset Disposal Relief (BADR)
💼 Corporation Tax Rates 2025/26
- Profits up to £50,000: 19%
- £50,001 – £250,000: Marginal Relief applies
- Over £250,000: 25%
👉 Learn more in our Corporation Tax Section
🧾 VAT Thresholds 2025/26
Registration & Deregistration
- Registration Threshold: £90,000
- Deregistration Threshold: £88,000
VAT Rates
- Standard Rate (20%): Most goods and services
- Reduced Rate (5%): Energy, home improvements
- Zero Rate (0%): Food, books, children’s clothes
👉 Need help registering for VAT? Check out our VAT Checklist
💷 National Minimum & Living Wage from April 2025
| Age Group | Hourly Rate |
|---|---|
| Apprentices & Under 18 | £7.55 |
| 18 to 20 | £10.00 |
| 21 and over (NLW) | £12.21 |
✅ Final Thoughts
Navigating tax as a self-employed professional doesn’t have to be overwhelming. With the right guidance and planning, you can stay compliant and optimise your tax position.
📌 Need tailored advice or a done-for-you tax service?Contact us today by ompleting our enquiry form below or by phone @ 01615314179.
