UK Tax Rates, Thresholds & Allowances for the Self-Employed: 2025/26 Guide

If you’re self-employed, a sole trader, or running your own limited company in the UK, understanding how much tax you owe is essential. This comprehensive 2025/26 tax guide explains everything you need to know — from income tax to National Insurance contributions (NICs) and dividend tax — all compared to the 2024/25 tax year.

🗓️ When Do UK Tax Rates Change?

UK tax rates usually change at the start of the tax year, which runs from 6 April to 5 April annually. This guide focuses on changes for 2025/26 and what’s staying the same.

👥 Personal Allowance 2025/26: What Income Is Tax-Free?

• Tax-Free Income: £12,570
• Same as 2024/25
• Applies across all income sources (employment, self-employment, property, dividends)

⚠️ High-Income Reduction Rule: If your income exceeds £100,000, your personal allowance reduces by £1 for every £2 earned. It disappears completely at £125,140.

💷 Income Tax Rates for 2025/26 (England, Wales & NI)

Tax Band2024/25 Threshold2025/26 ThresholdTax RatePersonal Allowance£0 – £12,570£0 – £12,5700%Basic Rate£12,571 – £50,270£12,571 – £50,27020%Higher Rate£50,271 – £125,140£50,271 – £125,14040%Additional Rate£125,140+£125,140+45%

Example: If you earn £60,000:

• £12,570 is tax-free
• £37,700 taxed at 20%
• £9,730 taxed at 40%

🏴 Scottish Income Tax Bands 2025/26

BandIncome ThresholdRatePersonal Allowance£0 – £12,5700%Starter Rate£12,571 – £15,39719%Basic Rate£15,398 – £27,49120%Intermediate Rate£27,492 – £43,66221%Higher Rate£43,663 – £75,00042%Advanced Rate£75,001 – £125,14045%Top Rate£125,140+48%

💼 National Insurance Contributions (NICs) 2025/26

Employees (Class 1 – Primary)

• £6,500 (LEL): 0%
• £12,570 (Primary Threshold): 8%
• Over £50,270: 2%

Employers (Class 1 – Secondary)

• Threshold: £5,000 @ 15%
• Employment Allowance: Up to £10,500

📌 Note: Class 1A/1B NICs apply to Benefits in Kind. Paper P11Ds are being phased out from 2026.

Self-Employed (Class 4)

• Up to £6,845: 0%
• £12,570 – £50,270: 6%
• Over £50,270: 2%

💸 Dividend Tax Rates 2025/26

• Dividend Allowance: £500
• Basic Rate: 8.75%
• Higher Rate: 33.75%
• Additional Rate: 39.35%

✅ You can use both the Personal Allowance and the Dividend Allowance.

🏠 Capital Gains Tax (CGT) 2025/26

Exempt Amounts

• Individuals: £3,000
• Trusts: £1,500

Rates

Asset TypeBasic RateHigher RateResidential Property18%24%Other Assets10%20%

💡 Tip: You may qualify for Business Asset Disposal Relief (BADR)

💼 Corporation Tax Rates 2025/26

• Profits up to £50,000: 19%
• £50,001 – £250,000: Marginal Relief applies
• Over £250,000: 25%

👉 Learn more in our Corporation Tax Section

🧾 VAT Thresholds 2025/26

Registration & Deregistration

• Registration Threshold: £90,000
• Deregistration Threshold: £88,000

VAT Rates

• Standard Rate (20%): Most goods and services
• Reduced Rate (5%): Energy, home improvements
• Zero Rate (0%): Food, books, children’s clothes

👉 Need help registering for VAT? Check out our VAT Checklist

💷 National Minimum & Living Wage from April 2025

Age GroupHourly RateApprentices & Under 18£7.5518 to 20£10.0021 and over (NLW)£12.21

✅ Final Thoughts

Navigating tax as a self-employed professional doesn’t have to be overwhelming. With the right guidance and planning, you can stay compliant and optimise your tax position.

📌 Need tailored advice or a done-for-you tax service?Contact us today by ompleting our enquiry form below or by phone @ 01615314179.