Sole Trader Tax and National insurance rates for the 24/25 Tax year

Important dates and deadlines

The UK tax year for individuals runs from 6th April - 5th April each year, with the deadline always the following 31st January.

For the 24/25 tax year, this will cover personal income between 6th April 24 - 5th April 25 with a filing deadline of 31st January 2026.

Personal allowance

The personal allowance remains at £12,570 for the 24/25 tax year, including Scotland, England, Northern Ireland and Wales. This means that the first £12,570 you earn will be tax free.

The exception to this is if you have a Gross income of over £100,000. If your income exceeds this amount you begin to lose your personal allowance. If you are a Sole Trader with income over this level we would highly recommend speaking to your accountant to review tax efficiency.

Tax free Trading allowance

The Trading allowance of £1,000 remains in place for 24/25. This therefore means if your Sole trader income for the full tax year is £1,000 or less, then you may not need to file a self-assessment as you can offset the £1,000 against your trade income.

If your income is over £1,000 then you can decide to either utilise the £1,000 trade allowance against your income, or claim the actual expense for the year.

Income tax rates

The table below gives the income tax rates and thresholds for the 24/25 tax year, with the 23/24 tax year also included.

England, Wales and Northern Ireland :

Tax Rate	2023/24 Tax Band Threshold	2024/25 Tax Band Threshold
Personal allowance: How much income you can earn before you start to pay income tax. No tax on this income.	£0 – £12,570	£0 – £12,570
Basic rate income tax: 20% tax on the proportion of income which falls into this tax bracket.	£12,571 – £50,270 20%	£12,571 – £50,270 20%
Higher rate income tax: The part of your income which falls into this tax band is taxed at 40%	£50,271 – £125,140 40%	£50,271 – £125,140 40%
Additional rate income tax: This is the highest rate. The income you earn above this threshold is subject to tax at 45%	£125,140 upwards 45%	£125,140 upwards 45%

 Scotland has different rates which are shown below. 24/25 see's the introduction of a new 'Advanced tax rate'

Scotland :

Tax Rate	2023/24 Tax Band Thresholds	2024/25 Tax Band Thresholds
Personal allowance: No tax on this income.	£0 – £12,570	£0 – £12,570
Starter rate	£12,571 – £14,732 19% tax	£12,571 – £14,876 19% tax
Basic rate	£14,733 – £25,688 20% tax	£14,877 – £26,561 20% tax
Intermediate rate	£25,689 – £43,662 21% tax	£26,562 – £43,662 21% tax
Higher rate	£43,663 – £125,140 42% tax	£43,663 – £75,000 42% tax
Advanced rate	– Not in use	£75,001 – £125,140 45% tax
Top rate	Over £125,140 47% tax	Over £125,140 48% tax

National insurance

As a Sole Trader, you may have to pay National insurance, which will depend on your level of profits you make during the year. This will be calculated on your self-assessment tax. The 24/25 tax year see the Class 2 National insurance abolished, leaving just the Class 4 National insurance to pay where relevant :

	2023/24 Annual Threshold	2024/25 Annual Threshold
No National insurance is due at this level, however you may want to check your National insurance record for any gaps.	£0 – £6,724	£0 – £6,724
Small Profits Threshold (SPT): You won’t pay NI on profits at or above this point and below the Lower Profits Threshold (LPT), but you will build up National Insurance credits.	£6,725	£6,725
Lower Profits Threshold (LPT): Class 2 NI :	Profits over £12,570 2023/24: £3.45 per week	Profits over £12,570 2024/25: Abolished
Lower Profits Limit (LPL): Class 4 National Insurance on your profits between £12,570 - £50,269 at a rate of:	Profits over £12,570 2023/24: 9%	£12,570 2024/25: 6%
Upper Profits Limit (UPL): Class 4 NI on your profits over £50,270 :	Profits over £50,270 2023/24: 2%	Profits over £50,270 2024/25: 2%

If you would like support on anything raised or to see how HPC Accountancy could support you and save you tax, get in touch today!