– Personal Allowance: £12,570 per year (for individuals with annual income not exceeding £100,000).

– Income Tax Rate – Basic Rate Band (currently up to £50,270): 20%.

– Income Tax Rate – Higher Rate Band (currently between £50,271 and £125,140): 40%.

– Income Tax Rate – Additional Rate Band (currently above £125,140): 45%.

– Dividend Allowance: £0.

– Dividend Tax Rate – Basic Rate Band (up to £50,270): 8.75%.

– Dividend Tax Rate – Higher Rate Band: 33.75%.

– Dividend Tax Rate – Additional Rate Band: 39.35%.

– Employer’s National Insurance Contribution (Class 1) Allowance (Employment Allowance): £10,500 per year (not available to companies employing only their director).

– National Insurance Class 2 (Self-Employed): £3.50 per week (full exemption if annual income does not exceed £6,845).

– National Insurance Class 4 (Self-Employed): 6% on income between £12,570 and £50,270 per year.

– Additional National Insurance Class 4 (Self-Employed): 2% on income above £50,270 per year.

– National Minimum Wage (for individuals aged 21 and over): £12.21 per hour.

National Insurance Class 1:

Employee:
– 8% on earnings between £12,570 and £50,270 per year (Primary Threshold);
– 2% on earnings above £50,270 per year (Upper Earnings Limit).

Employer:
– 15% on employee earnings above £5,000 per year (£416.66 per month; £96 per week).

Fixed Thresholds for 2025–26:

– Lower Earnings Limit (below which employees do not pay NI): £6,500 per year (£541 per month; £125 per week).
– Primary Threshold: £12,570 per year.
– Upper Earnings Limit: £50,270 per year.

Corporation Tax (applicable mainly to Limited Companies):

– Up to £50,000 profit: 19% (small profits rate).
– Above £250,000 profit: 25%.
– Between £50,000 and £250,000: marginal relief applies (marginal relief fraction: 3/200 = 0.015%).

Inheritance Tax (IHT) in the United Kingdom

Inheritance Tax (IHT) is charged on the value of a deceased person’s estate — everything they owned at death, including property, savings, and investments.

Key rules:
– Nil-Rate Band: £325,000 – no tax is due if the estate’s value does not exceed this amount.
– Tax rate: 40% – applied to the portion of the estate exceeding £325,000.

Additional Allowance – Residence Nil-Rate Band:
If you leave your home to direct descendants (children or grandchildren), an additional allowance of £175,000 may apply.
In practice, the total tax-free threshold can reach £500,000.

Married couples and civil partners:
– Assets left to a spouse or civil partner are exempt from IHT.
– Unused allowances (e.g., £325,000) can be transferred to the surviving partner, potentially increasing the joint tax-free limit to £1 million.

When to pay the tax:
– The tax must be paid within 6 months from the end of the month of death.
– The executor of the will is usually responsible for payment.

VAT (Value Added Tax)

– Main rate: 20%
– Reduced rate: 5%

– Registration threshold: £90,000 turnover in the past 12 months (rolling period, not aligned with the company’s accounting year).
– Deregistration threshold: £88,000 turnover in the past 12 months (rolling period, not aligned with the company’s accounting year).