UK Charge Rates, Edges and Allowances for Self-Employed Individuals and Employers in 2023/24 and 2022/23
Read our guide to UK charge rates and limits for sole dealers, constrained companies, accomplices and associations, bosses, and other businesses.
UK tax is a massive subject, so getting to grips with all of the rules and regulations can be difficult. With so many different types of tax, each with their own tax bands and thresholds, allowances, rates, and relief schemes, it’s understandable that you might feel a bit lost!
Just to make things even more confusing, the structure of a business also affects its tax reporting requirements and deadlines. This means the way you pay tax varies depending on whether you’re a sole trader, a limited company, a partnership, or another type of business.
The type and rate of taxes that you pay can also change according to your employment status as an employee or an employer. You might even be both, if you’re the owner and director of your own company and pay yourself a salary, or if you have a side-hustle on the go!
Our business tax guide explains this year’s tax brackets and rates for 2023/24 as well as for the 2022/23 tax year. We’ll go through how different types of tax might affect you, and what this means for being tax efficient in your business.
The Personal Allowance
Income tax thresholds, rates, and bands
The National Minimum Wage (NMW) and National Living Wage (NLW)
National Insurance for employers, employees, and the self-employed
Employment Allowance
Dividend Tax
Capital Gains Tax
Capital Allowances
Corporation Tax
VAT registration threshold and VAT rates
When do tax rates change?
Tax rates and allowances are normally set before the start of a new tax year, and then stay at that level until the following year. The 2022/23 tax year was slightly unusual with several updates taking place, so we hope 2023/24 will be much more stable! Introducing changes during a tax year doesn’t affect its start and end dates though.
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The UK tax year always runs from 6th April to 5th April the following year.
The government normally make a Budget statement to announce any changes to UK tax brackets and rates, though they might sometimes introduce emergency measures. The most recent of these was made by Chancellor Jeremy Hunt in the Autumn Financial Statement on 17th November 2022.
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Personal Allowance
What is the tax-free Personal Allowance?
The personal tax allowance is the amount of income you can earn before you start paying income tax on it. Even if you’re employed andself-employed, or receive an income from a variety of sources, you’ll only be able to use the personal allowance once in a tax year.
For instance, you might earn wages from an employer, receive income from property, make money from business activities, or a combination of all of these. The personal allowance will be applied against the total amount you make.
You might also be able to use the tax-free trading allowance against the first £1,000 of income you make from self-employment.
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How much is the Personal Allowance in 2023/24?
The tax-free Personal Allowance for 2023/24 is £12,570
The personal tax allowance normally increases slightly each year, but the threshold for 2023/24 has been frozen at the 2022/23 limit of £12,570.
You’ll only pay income tax on any earnings which are above the £12,570 threshold. So, if you earn £18,000 in a tax year, the taxable element of your income is £5,430.

The Personal Allowance for high earners
It’s worth noting that the tax-free Personal Allowance starts to reduce if you earn a higher level of income. For every £2 that you earn above £100,000, the Personal Allowance reduces by £1. This means that if you earn £125,140 or more, your personal tax allowance is zero.
Income Tax
How do income tax thresholds, rates, and allowances work?
Tax terminology is often used interchangeably, but tax bands and tax rates actually refer to different things. UK income tax is worked out as a series of marginal bands, which means that you only pay the relevant tax rate on the part of your salary within that tax band.
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The amount of tax that you pay is worked out as a percentage (known as a tax rate) of your income.
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It helps to think of the income tax system as a stack of containers. Each container is a tax band, and represents a portion of your salary at a particular level of income. You’ll pay one rate of tax on the first container of income. If your earnings are more than the first container can hold, you’ll go over the threshold into the next container, which uses a different tax rate.
Income tax myth buster
It’s a common misconception, but if you earn more money and move up into a new tax band, this doesn’t mean that your new tax rate applies to all of your earnings. You only pay tax at the rate which affects the part of your earnings within a particular band.
What are the income tax rates and thresholds in 2023/24?
The first set of tables below show the income tax rates and band thresholds for 2022/23 and 2023/24 in England, Wales, and Northern Ireland. Scotland uses different tax bands and thresholds, and these are shown underneath.
From April 2023 the thresholds for paying the highest rates of tax will be lower than they were in the 2022/23 tax year, so you may end up paying a higher rate of tax on more of your income.
We know how confusing tax can be, so take a look at our online tax accounting services, or get an instant quote online if you need help.
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2023/24 Income tax in England, Wales, and Northern Ireland

For example
If you earn a self-employed or salaried income of £60,000 in England, Wales, or Northern Ireland during the 2023/24 tax year, you’ll pay:
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0% tax on the first £12,570
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20% basic rate tax on the part of your income which falls into the next tax bracket (£12,571 up to £50,270). This means you’ll pay 20% tax on £37,700.
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40% higher rate income tax on the next chunk (£50,271 up to £60,000), so you’ll pay 40% tax on £9,730.​
2023/24 Income tax in Scotland
This table shows the tax bands in Scotland for 2022/23 and 2023/24, along with the tax rate (shown as a percentage) which applies to the income in each band. Some of the Scottish tax rates and thresholds have changed for 2023/24.

For example
Using the same salary of £60,000 from our previous example, in 2023/24 a Scottish taxpayer will pay:
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0% tax on the first £12,570.
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19% on the proportion of your income subject to the starter rate, which covers £12,571 – £14,732. You’ll pay 19% tax on £2,161.
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20% basic rate tax on the part of your income which falls into the next tax bracket (£14,733 – £25,688). This means you’ll pay 20% tax on £10,955.
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21% tax on the part of your salary which falls into the intermediate tax band, which is £25,689 – £43,662. You’ll pay 21% tax on £17,973.
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40% higher rate income tax on the next chunk (from £43,663 up to the £60,000 salary we’re using in this example). So, you’ll pay 40% tax on £16,337.
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The National Minimum Wage (NMW) and National Living Wage (NLW)
There are rules which state the basic minimum hourly rate an employer must pay an employee, depending on how old they are.
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Most employees under the age of 23 are paid the National Minimum Wage (NMW) at the rate which applies to their age group.
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Employees who are 23 and older must receive the National Living Wage (NLW).
The minimum hourly rates for National Living Wage and National Minimum Wage usually increase each tax year. Thanks to their similar sounding names, it can be very easy to confuse them.
To help you get past the jargon, our article explains the differences between the National Living Wage, National Minimum Wage, and the Living Wage in more detail.
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How much is the National Minimum Wage in 2023/24?
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National Minimum Wage is worked out on the basis of the employee’s age, although there are different rates which apply for apprentices. Our table below shows the rate of National Minimum Wage for 2022/23 and 2023/24.

How much is the National Living Wage?
The National Living Wage (NLW) in 2023/24 is £10.42 per hour
The National Living Wage is the minimum amount which employers must pay to employees who are 23 or older. In April 2023 it increases to an hourly rate of £10.42, from £9.50 per hour in 2022/23.
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National Insurance
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Does everyone need to pay National Insurance?
Paying the right amount of National Insurance (known as making National Insurance Contributions, or NICs) is important, because it can count towards your eligibility for some benefits and the state pension.
National Insurance is paid by employees and self-employed workers on their income, and by employers on the wages they pay their staff. The rate of National Insurance that you pay can change because it depends on your employment status, as well as on how much money you earn.
There are different types of National Insurance, known as ‘classes’, and the class that you pay depends on the source of income. For instance, self-employed people pay Class 2 National Insurance.
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Class 1 (Primary): Employees pay this on the wages they earn working for an employer.
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Class 1 (Secondary): Paid by employers as a contribution towards their employees’ National Insurance.
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Class 1A or 1B: Some employers may also need to make NI contributions on the equivalent financial value of any work benefits, (sometimes known as Benefits in Kind, or BiKs) if they provide them to employees.
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Class 2: Self-employed people pay Class 2 NI on what they earn through their business activities.
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Class 3: These are voluntary contributions that you can make if you need to top up the amount of National Insurance you paid in a tax year.
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Class 4: Depending on how much they earn, self-employed people might also pay Class 4 National Insurance on income earned from their business activities.
Will I pay different types of NI?
You might pay more than one type (or class) of National Insurance in the same tax year. This can happen if you work for someone as an employee, as well as earning your own self-employed income.
Another common example is someone who is both an employer and an employee (such as someone who is a director of their own limited company), but there are other reasons too.
How much National Insurance will I pay?
The rate of National Insurance that you pay depends on which Class you must make contributions for. To make things even more confusing, the payment thresholds for the various types of NI all have different names and rates. It can be a bit bewildering, so get an instant quote for our online accounting services if you need more help.
Our tables below show the rates and thresholds for each class of National Insurance for employers, employees, and the self-employed.
Class 1 Primary National Insurance for employees
Employees pay Class 1 (Primary) National Insurance on the money that they earn working for an employer. It’s worked out as a percentage of their income, and their employer deducts what they owe from their wages before paying them. The employer then uses the PAYE systemto pay these deductions, known as NI contributions, to HMRC on the employee’s behalf.
Employers can only make these deductions if the employee qualifies for Class 1 National Insurance, which depends on how much money they earn, and their age. Use our free online salary and tax calculator to work out your take-home pay.
Although National Insurance thresholds will remain frozen until April 2028, there were several other changes which took place during the 2022/23 tax year. The thresholds at which employees and self-employed people start making NI contributions on their earnings increased in July 2022, and then the rate for some types of National Insurance changed in November 2022.
2023/24 Class 1 (Primary) National Insurance thresholds and rates for employees