Tax Bands Explained: What Tax Band Am I In?

As we enter the 2023/24 tax year, you can bet that many sole traders will be asking themselves the same question: ‘what tax band am I in?’. The answer depends on your taxable income and where…

5 Minute Read

Last Updated: 23rd October 2024

As we enter the 2023/24 tax year, you can bet that many sole traders will be asking themselves the same question: ‘what tax band am I in?’. The answer depends on your taxable income and where you live in the UK.

From April 2024, self-employed people can submit their Self Assessment tax return for the 2023/24 tax year. HMRC will then use this to work out your taxable income and therefore which tax band you’ll fall into. They’ll factor in information such as your income and expenses.

You’ll then either be classed as:

  • A basic rate taxpayer, higher rate taxpayer, or additional rate taxpayer if you live in England, Wales or Northern Ireland
  • A starter, basic, intermediate, higher or top rate taxpayer if you live in Scotland

Here, we discuss the various rates and thresholds by country, as well as how the latest tax changes may impact you this tax year.

INCOME TAX

The following tax bands for 2024/25 apply if you live in England, Wales or Northern Ireland. They should help you to answer the question ‘what tax band am I in?’:

BandTaxable income    Tax rate
Personal Allowance   Up to £12,5700%
Basic rate £12,571 to £50,27020%
Higher rate£50,271 to £125,14040%
Additional rateOver £125,140
45%

Your personal tax allowance is maxed at £12,570. This means that you can earn anything below this figure and not pay tax.

Then, with the marginal bands, you only pay this tax rate on the stipulated portion of earnings. So, if you have a taxable income of £37,000, you would pay 20% Income Tax on £24,430 (£37,000 minus the Personal Allowance of £12,570).

Need to know! These are the tax rates for the 2024/25 tax year.

In Scotland, taxpayers pay according to a slightly different model. Not only are there more bands, but the rates are different to other countries within the UK. The bands for the 2024/25 tax year in Scotland are:

Tax thresholds and ratesTaxable income
Personal Allowance (tax free)Up to £12,570
Starter rate (19%)£12,571-£14,732
Basic rate (20%)£14,733-£25,688
Intermediate rate (21%)£25,689-£43,662
Higher rate (41%)£43,663-£150,000
Top rate (46%)Over £150,000

National Insurance

When it comes to your National Insurance Contributions as a sole trader, you may pay both Class 2 and 4.

Class 2 National Insurance is a fixed weekly amount. If your profits are above £12,570, this will be £3.45 per week. If not, you’re exempt.

Class 4 National Insurance is calculated according to your earnings.

Class 4 National Insurance ContributionProfits
N/AUp to £12,570
9%£12,571-£50,270
2%Over £50,270

Scottish National Insurance rates are the same as those in Northern Ireland, England and Wales.

CAPITAL GAINS TAX

If you sell or dispose of an asset that is worth more than £6,000, then you may need to pay Capital Gains Tax. To help you determine whether or not this applies to you, HMRC has a list of what they mean by an asset.

The annual exemption amount for 2023/24 is set at £6,000. The rate of Capital Gains Tax you’ll pay depends on which tax bracket you fall into:

Tax bandRate on gains from residential propertyRate on gains from other asset
Basic18%10%
Higher28%20%
Additional28%20%

Tax band

Again, for Scottish taxpayers, the rates are the same.

Arrange a review today. Alternatively, if you’d like to learn more, don’t hesitate to speak to our team.

Trusted by over 20,000 subscribers

You don't need to be an expert to complete your self assessment tax return.

Find Out More

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.

5 Excellent Reasons to Choose Us

Discover how to make tax returns a doddle...

Find out more

Reporting and paying tax on trust income via Self Assessment

21 Oct 2024

According to the HMRC-managed Trust Registration Service, about 633,000 trusts and estates are registered in the UK and they generate a total annual income…
READ MORE >

Don’t fall for fake text, email, WhatsApp, letter or phone tax scams 

08 Oct 2024

It’s a sad fact of life now that many of us are targeted by scammers – regularly, in many cases. Whether it’s a bogus…
READ MORE >

Everything you need to know about your P60

10 Sep 2024

There are a wide range of UK tax forms and documents. They each have a specific purpose and code number, which enables HMRC, employers…
READ MORE >

How GoSimpleTax Works

01.
Register

Simply register for free with your full name and email address.

02.
Select Your Income

Select the income you receive and follow the hints and tips for potential tax savings.

03.
Validate Your Information

Validate your personal information and submit directly to HMRC to get confirmation in just seconds.

ipad

Work Anywhere, With Any Device

Gone are the days of fretting over a calculator surrounded by scraps of paper at the eleventh hour.

GoSimpleTax’s tax return software uses the information you upload in real time to calculate your income and expenditure, working out the tax you owe and sending you helpful notifications when there’s the possibility of a mistake.

Start your free trial

"The software is intuitive and proved very easy to navigate. I found the whole process refreshingly simple. I saved a lot of money too!"

Steve J.

Ordained Presbyter

"Easy to use and value for money. Everything you need to do your tax."

Gordon J.

Self Employed

"It fills in all the forms and sends them to the Inland Revenue. Not expensive either. Takes the stress out of doing your tax return online."

Ross G.

Team Rector

5 reasons to use GoSimpleTax >