What’s changing in the 2024-25 tax year?

What you’ll learn:

• How some of the tax allowances and rates are changing.
• How much the personal allowance will increase by.
• Who the changes will affect.

A range of new tax allowances and rates usually comes into effect when one tax year finishes and a new one begins.

It’s worth understanding what the major changes are so you can make the most of the reliefs available to you. Here’s a guide to some of the biggest changes coming into effect in the 2024-25 tax year, which runs from 6 April 2024 to 5 April 2025.

Remember that this is just a guide to some of the changes for the 2024-25 tax year, and that tax rules and allowances can and do change over time. Their effect on you depends on your individual circumstances, which can also change.

Personal Allowance

The tax-free personal allowance is the amount of income you can earn before you have to start paying income tax. All individuals are entitled to the same personal allowance, regardless of their date of birth.

The personal allowance is £12,570 in the 2024-25 tax year. Bear in mind that the personal allowance is restricted by £1 for every £2 of an individual’s adjusted net income above £100,000.

A spouse or civil partner who isn’t liable to income tax above the basic rate may transfer £1,250 in the 2024-25 tax year to their spouse or civil partner, as long as the recipient isn’t liable to income tax above the basic rate.

Capital gains tax (CGT)

The current CGT annual exemption has dropped to £3,000 in 2024-25.

If you invest outside an ISA, any profits made above the annual CGT allowance are subject to tax at 10% or 20% depending on your tax band. 

From 30 October 2024 onwards, gains within the basic rate band are taxed at 18% and at 24% within the higher/additional rate bands.

There is an additional surcharge to be paid on residential property (other than your own home) and carried interest gains.

Basic rate taxpayers will pay 18% and higher rate taxpayers would pay 24% on such a gain over the annual allowance.

CGT on residential property does not apply to your main home, only to additional properties (such as a flat you let out).

Various other allowances and rates have also changed in the 2024-25 tax year.