Income Tax Rates
Income tax - This is tax paid on your income and may be generated from a number of different sources: Income from employment and self-employment, pensions, social security, investments and savings, property and other miscellaneous income.
Income tax rates are the percentage rates at which tax is paid. More than one percentage rate may apply at a time, depending on your level of income and the type of income being taxed.
Questions you may ask:
- How much tax will my employees have to pay on a company car?
- Would a company car affect the tax bandings of my employees?
- How is the tax due calculated under an Optional Remuneration Arrangement?
How does it work?
Taxable benefits provided to your employees i.e. a company car, will be taxed as additional income at an employees highest marginal tax rate.
Allowances
| Personal Allowances | 2021/22 | 2022/23 | 2023/24 | 2024/25 |
|---|---|---|---|---|
| Personal (irrespective of age) *** | £12,570 | £12,570 | £12,570 | £12,570 |
| Income limit for Personal Allowance* | £100,000 | £100,000 | £100,000 | |
| Dividend Allowance | £2,000 | £2,000 | £1,000 | |
| Personal Savings Allowance** | £1,000 | £1,000 | £1,000 |
| Married Couples Allowance (MCA) | 2021/22 | 2022/23 | 2023/24 | 2024/25 |
|---|---|---|---|---|
| Personal (irrespective of age) *** | £9,125 | £9,415 | £10,375 | |
| Income limit for Personal Allowance* | £30,400 | £31,400 | £34,600 | |
| Dividend Allowance | £3,360 | £3,360 | £3,360 |
| Blind Persons Allowance | 2021/22 | 2022/23 | 2023/24 | 2024/25 |
|---|---|---|---|---|
| Personal (irrespective of age) *** | £2,520 | £2,500 | £2,520 |
* The Personal Allowance is reduced by £1 for every £2 that income exceeds £100,000
** Reduced to £500 for higher rate tax payers
***Spouses or civil partners are able to transfer up to 10% of their unused personal allowance to their partners. This is available provided neither person pays tax at the higher or additional rates and neither were born before the 6 April 1935.
Taxable Income
| Income Tax Rates | % | 2021/22 | 2022/23 | 2023/24 | 2024/25 |
|---|---|---|---|---|---|
| Basic Rate* | 20% | £0 - £37,700 | £0 - £37,700 | £0 - £37,700 | £0 - £37,700 |
| Higher Rate* | 40% | £37,701 - £150,000 | £37,701 - £150,000 | £37,701 - £125,140 | £0 - £37,700 |
| Additional Rate* | 45% | Above £150,000 | Above £150,000 | Above £125,140 | Above £125,140 |
* Income Tax rates and thresholds in Scotland and Wales may vary to those in the rest of the UK, for further information visit the Scottish and Welsh Government websites respectively on www.gov.uk/scottish-income-tax and ttps://gov.wales/welsh-rates-income-tax for current rates
The information provided is based on existing and proposed legislation as at November 2024 (30th October 2024 UK Government Autumn Statement). Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.