What will self-employment tax be for 2024/25? There are usually new UK tax brackets and other updates to thresholds introduced each April.
So here are eight self-employed tax changes to understand for the new tax year, from National Insurance reforms to business rates changes.
The new tax year starts on 6 April every year, and with that often comes a range of new tax rates and thresholds. Here's what you need to know for the tax year 2024/25:
The personal allowance in 2024/25 will remain £12,570. This is how much you can earn tax free.
The government has frozen this tax allowance until 2028. Businesses and taxpayers in general are facing rising costs, so could feel the pinch of this personal allowance freeze.
And over the long-term, if earnings rise and the personal allowance stays the same, then you’ll pay more in tax.
The additional income tax threshold is £125,140 (it reduced from £150,000 in April 2023).
These are the income tax rates and thresholds the self-employed should be aware of in 2024/25:
There are different bands and rates for Scotland.
The self-employed usually pay both Class 2 and Class 4 National Insurance through their annual Self Assessment tax return.
The chancellor announced big changes to National Insurance in the Autumn Statement, so from 6 April 2024 the self-employed no longer need to pay Class 2 National Insurance.
Small business owners with staff also need to pay employee National Insurance contributions via payroll.
No National Insurance incurred between
£0 to £6,724
£0 to £6,724
Small profits threshold for Class 2 NICs
No longer applies
Lower profits limit for Class 4 NICs
Upper profits limit
Here are the National Insurance rates:
Check the government website for more information.
If you’re an employer, or also have income from employment, here are the Class 1 National Insurance tax thresholds.
2024/25 weekly threshold
2024/25 annual threshold
Lower earnings limit
Upper earnings limit
Earnings above the primary threshold incur NICs at 10 per cent in 2024/25.
Earnings above the upper earnings limit incur NICs at two per cent in 2024/25.
Employer NICs are due on annual salary payments to employees above a certain threshold. This is £9,100 in 2024/25 (a weekly threshold of £175).
The rate is 13.8 per cent in 2024/25.
National Insurance is also due at this rate on any work benefits you give employees.
Rate from April 2024
Rate from April 2023
National living wage
£11.44 (aged 21+)
Rate for 21-22 year olds
National living wage rate applies
Rate for 18-20 year olds
Rate for 16-17 year olds
Read more about the national minimum wage.
The dividend tax rate is staying the same in 2024/25.
But Jeremy Hunt slashed the dividend allowances in his Autumn Statement, so for 2024/25 you’ll pay dividend tax on the dividends you earn above £500 (instead of £1,000) at these rates:
Self Assessment taxpayers have until April 2026 to start using Making Tax Digital for income tax. Initially this will apply to those with an income over £50,000 and then those earning £30,000 to £50,000 will need to use the system from April 2027.
Those earning less than £30,000 won’t be required to file using Making Tax Digital (at least for now).
Making Tax Digital was first rolled out in 2019 for VAT-registered businesses with a taxable turnover of more than £85,000. And it came in for all other VAT-registered businesses in 2022.
This system requires businesses to keep digital records and file VAT returns digitally. Businesses need to use relevant accounting software.
Retail, hospitality, and leisure businesses should be aware of the business rates changes for 2024.
Business rates are now based on a new rateable value. This is to take into account changes in property value since 2017.
This was first introduced in April 2023, but the government brought in a relief for retail, hospitality, and leisure businesses to help with the transition.
However, this relief is set to end in April 2024 and business rates are likely to soar for small businesses.
You can estimate your business rates using the government’s online calculator. There are different rates for businesses with premises in Scotland and Northern Ireland.
Working tax credits are coming to an end, and people claiming solely working tax credit should be migrated to Universal Credit before the start of the 2024/25 tax year. The remaining people claiming will be migrated by the start of the 2025/26 financial year.
Make sure you check your tax credits information and how this could impact your Self Assessment.
the capital gains tax allowance for individuals will be halved to £3,000 from April 2024 (it’s £1,500 for trustees) and full expensing is now permanent
Other tax changes could be announced in the Spring Budget on Wednesday, 6 March. Rumours include income tax threshold changes, child benefit reforms, and an update to ISAs.
Keep an eye on the Knowledge centre for all the latest resources and news for small businesses and the self-employed.
Please use this article as a guide and get professional tax advice on self-employed tax brackets if you're not sure about anything.
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
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