Tax rates and allowances
FA 2025
The following tax rates and allowances will be reproduced in the examination paper for Paper (TX-UK). In addition, other specific information necessary for candidates to answer individual questions will be given as part of the question.
Income Tax
Normal rates | Dividend rates | |||
Basic rate | £1 – £37,700 | 20% | 8.75% | |
Higher rate | £37,701 – £125,140 | 40% | 33.75% | |
Additional rate | £125,141 and over | 45% | 39.35% |
A starting rate of 0% applies to taxable savings income where it falls within the first £5,000 of taxable income.
Savings income nil rate band | - Basic rate tax payers | £1,000 |
- Higher rate tax payers | £500 | |
Dividend income nil rate band | - All tax payers | £500 |
Personal Allowance
£ | |
Personal Allowance | 12,570 |
Transferable amount | 1,260 |
Income limit | 100,000 |
Where adjusted net income is £125,140 or more the personal allowance is reduced to zero.
Residence status
Days in UK | Previously resident | Not previously resident |
Less than 16 | Automatically not resident | Automatically not resident |
16 to 45 | Resident if 4 UK ties (or more) | Automatically not resident |
46 to 90 | Resident if 3 UK ties (or more) | Resident if 4 UK ties |
91 to 120 | Resident if 2 UK ties (or more) | Resident if 3 UK ties (or more) |
121 to 182 | Resident if 1 UK tie (or more) | Resident if 2 UK ties (or more) |
183 or more | Automatically resident | Automatically resident |
Child benefit income tax charge
Where income is between £60,000 and £80,000, the charge is 1% of the amount of child benefit received for every £200 of income over £60,000.
Car Benefit Percentage
The relevant base level of CO2 emissions is 55 grams per kilometre.
The percentage rates applying to petrol cars (and diesel cars meeting the RDE2 standard) with CO2 emissions up to this level are:
51 grams to 54 grams per kilometre | 16% |
55 grams per kilometre | 17% |
A 3% percentage applies to electric-powered motor cars with zero CO2 emissions.
For hybrid-electric motor cars with CO2 emissions between 1 and 50 grams per kilometre, the electric range of the car is relevant:
Electric Range
130 miles or more | 3% |
70 to 129 miles | 6% |
40 to 69 miles | 9% |
30 to 39 miles | 13% |
Less than 30 miles | 15% |
Car Fuel
The car fuel benefit is £28,200
Company Van benefit
The company van benefit scale charge is £4,020 and the van fuel benefit is £769.
A van with zero emissions does not give rise to a benefit.
Individual savings accounts (ISAs)
The overall investment limit is £20,000.
Rent a room relief
The rent-a-room relief limit is £7,500
Pension Scheme Limits
Annual allowance | - 2022-23 | £40,000 |
- 2023-24 to 2025-26 | £60,000 | |
Minimum allowance | £10,000 | |
Income limit | £260,000 |
The maximum contribution that can qualify for tax relief without any earnings is £3,600.
Approved mileage allowances: cars
Up to 10,000 miles | 45p |
Over 10,000 miles | 25p |
Capital Allowances:
Plant and machinery
Main pool | 18% |
Special rate pool | 6% |
Motor cars
New cars with zero CO2 emissions | 100% |
Second hand cars with zero CO2 emissions | 18% |
CO2 emissions between 1 and 50 grams per kilometre | 18% |
CO2 emissions over 50 grams per kilometre | 6% |
Annual investment allowance
Rate of allowance | 100% |
Expenditure limit | £1,000,000 |
Enhanced capital allowances for companies
Main pool first year allowance | 100% |
Special rate pool first year allowance | 50% |
Commercial structures and buildings
Straight-line allowance | 3% |
Cap on income tax reliefs
Unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income.
Corporation Tax
Financial Year | 2023 | 2024 | 2025 |
Small profit rate | 19% | 19% | 19% |
Main rate | 25% | 25% | 25% |
£ | £ | £ | |
Lower Limit | 50,000 | 50,000 | 50,000 |
Upper Limit | 250,000 | 250,000 | 250,000 |
Standard fraction | 3/200 | 3/200 | 3/200 |
Marginal relief
(Upper limit - Augmented profits) x Standard fraction x | Total Taxable Profits |
Augmented profits |
Quarterly Instalments
Profit threshold | £1,500,000 |
Value Added Tax
Standard rate | 20% |
Registration limit | £90,000 |
Deregistration limit | £88,000 |
Penalty for late VAT payments
Days Late | Penalty |
Up to 15 days | None |
16 to 30 days | 3% |
More than 30 days | 6% plus a daily penalty at an annual rate of 10% |
Inheritance Tax: Tax Rates:
Nil rate band | £325,000 | ||
Residence nil rate band | £175,000 | ||
Excess | – Death rate | 40% | |
– Lifetime rate | 20% | ||
Inheritance Tax: Taper relief
Years before death | Percentage reduction |
Over 3 but less than 4 years | 20% |
Over 4 but less than 5 years | 40% |
Over 5 but less than 6 years | 60% |
Over 6 but less than 7 years | 80% |
Rates of Interest
Official rate of interest: | 3.75% |
Rate of interest on underpaid tax: | 8.5% |
Rate of interest on overpaid tax: | 3.5% |
Capital Gains Tax - Individuals
Annual Exempt Amount | £3,000 | ||
Rates of tax: | |||
Normal rates | – Lower rate | 18% | |
– Higher rate | 24% | ||
Investors’ Relief | - Lifetime Limit | £1,000,000 | |
– Rate of tax | 14% | ||
Business Asset Disposal Relief (BADR) | - Lifetime Limit | £1,000,000 | |
– Rate of tax | 14% |
National Insurance Contributions
Annual | ||||
Class 1 | Employee | £1 - £12,570 | @ | 0% |
£12,571 – £50,270 | @ | 8% | ||
£50,271 and above | @ | 2% | ||
Class 1 | Employer | £1 - £5,000 | @ | 0% |
£5,001 and above | @ | 15% | ||
Employment allowance | £10,500 | |||
Class 1A | 15% | |||
Class 4 | £1 - £12,570 per year | @ | 0% | |
£12,571 – £50,270 per year | @ | 6% | ||
£50,271 and above per year | @ | 2% |
Standard penalties for errors
Taxpayer behaviour | Maximum penalty | Minimum penalty - unprompted disclosure | Minimum penalty - prompted disclosure |
Deliberate and concealed | 100% | 30% | 50% |
Deliberate but not concealed | 70% | 20% | 35% |
Careless | 30% | 0% | 15% |
SUPPLEMENTARY INSTRUCTIONS:
Calculations and workings need only be made to the nearest £.
All apportionments should be made to the nearest month.
All workings should be shown in Section C.