PERSONAL ALLOWANCES (PA)

2024/25

2023/24

Notes

Personal allowance

£12,570

£12,570

Each person is entitled to this basic PA.

Married couples allowance  (MCA) - elder born before 6.4.1935

£11,080

£10,375

1. MCA is available if either spouse was born before 6.4.1935.

2. Tax relief for MCA is given at 10%, so maximum relief is £1,108 for 2024/25.

3. MCA is reduced by £1 for every £2 of income that exceeds £37,000 in 2024/25 (£34,600 in 2023/24), but not below the minimum amount.

4. MCA is also reduced proportionately in the tax year of marriage.

Married couples allowance - minimum amount for those born before 6.4.1935

£4,280

£4,010

Transferable married couples allowance

This allowance is available to those who are not in receipt of married couples allowance and neither the transferor or recipient is a higher rate taxpayer.If a couple marry in the tax year they will get the allowance on a pro-rata basis.

£1,260

£1,260

This allowance could be worth up to £252 in 2024/25 (£252 in 2023/24).If there is a death of one party to the marriage, a divorce or separation, then the allowance continues for the rest of the tax year.

Income limit for personal allowances (PA)

You start to lose your PA by £1 for every £2 of taxable income > £100,000 - for 2024/25 if taxable income > £125,140, you lose all your PA of £12,570 (2023/24 > £125,140).  

£100,000

£100,000

Taxable income = gross income after adjusting for gross pension, gift aid and losses. The £100,000 limit applies irrespective of your age.

Blind persons allowance

£3,070

£2,870

OTHER ALLOWANCES

2024/25

2023/24

Notes

Rent-a-room relief

£7,500

£7,500

This is the tax-free income you can receive from renting out a room or rooms in your only or main residential home.

Personal savings allowance - basic rate taxpayers

£1,000

£1,000

Interest up to this amount is tax free - only the excess will be charged to tax. This is not available to additional rate taxpayers.

Personal savings allowance - higher rate taxpayers

£500

£500

Dividend allowance

£500

£1,000

UK and foreign dividends up to the allowance are tax free. This does not affect dividends you receive in an ISA.  

Micro entrepreneurs allowance - If you do sundry trading such as sell services or goods (e.g. on eBay) or rent property (e.g. Airbnb) then you won’t need to declare or pay tax on the first £1,000 of each source of income.

£1,000

£1,000

If your income from property or trading income exceeds £1,000 then you have a choice of deducting your actual expenses, or £1,000 if higher. Available to each.

INDIVIDUAL SAVINGS ACCOUNT - ISAs

2024/25

2023/24

Notes

ISA/NISA annual allowance in tax year

£20,000

£20,000

With ISAs, you pay no tax on income or capital gains and you do not have to declare these on your tax returns. You can invest in cash, stocks or any combination.

New Junior ISA investment annual limit

£9,000

£9,000

New child value of Child Trust Fund annual limit

£9,000

£9,000

LISA - annual limit for those aged 18-40. Government contributes a 25% bonus up to £1,000 per annum

£4,000

£4,000

Lifetime ISA is a valuable savings option to help towards saving flexibly for the long term or to purchase a first property.

PENSIONS SAVINGS - TAX RELIEF

2024/25

2023/24

Notes

Lump sum allowance

£268,725

N/a

A new lump sum allowance was introduced from April 2024.

Annual allowance (unused allowance for previous 3 tax years can be used subject to certain conditions).   

£60,000

£60,000

The maximum is £10K (2023/24:£10,000) if you already started drawing a pension.

The annual allowance above is the maximum that can be paid into a pension scheme that attracts tax relief, except for those with adjusted earnings in 2023/24 >£260K when it reduces on a tapering basis up to a minimum amount of £10,000.The threshold income level, where annual earnings start being calculated for the purposes of pension tax relief is £200,000.