Rates, allowances and reliefs for Self-Assessment Tax Returns

When it comes to completing your Self-Assessment Tax Return, knowing which rates, allowances and reliefs apply to you can make a big difference. From personal allowances to savings and dividend rates, we’ve broken down the key figures and thresholds for the current tax year, helping you make the most of what’s available and stay compliant with HMRC’s requirements.

 

INCOME TAX (ENGLAND, WALES AND NORTHERN IRELAND)

Personal allowance: £12,570 (tapered by £1 for every £2 of income over £100,000, lost entirely at £125,140).

Tax bands:

• 20% basic
• 40% higher
• 45% additional

Personal savings allowance: £1,000 (basic rate), £500 (higher rate), £0 (additional rate). The starting rate for savings remains a 0% £5,000 band where non-savings income is low enough (this will decrease as you exceed the personal allowance).

Dividend allowance is £500.

You only pay tax on any dividend income above the dividend allowance. The rates by tax band are:

• 75% (basic rate)
• 75% (higher rate)
• 35% (additional rate)

You do not pay tax on dividends from shares in an ISA. The ISA annual limit remains at £20,000 or £9,000 for a Junior ISA.

 

CAPITAL GAINS

• Annual exempt amount (individuals) is £3,000.

Rates (most assets): 18% (basic rate band) and 24% (higher/additional).

Residential property (not eligible for Private Residence Relief): 18% (basic rate band) and 24% (higher/additional).The rates changed part-way through 2024/25; for 2025/26 the above rates apply for the whole year.

Note on mid-year change (2024/25): gains realised on or after 30 October 2024 attracted the higher CGT rates introduced then. If you had disposals across that date, ensure your Self-Assessment Tax Return figures reflect the split correctly.

 

NATIONAL INSURANCE

• Self Assessment calculates any Class 4 NIC due and will include it in your bill.
• For reference, HMRC confirms Class 2 is no longer payable by most self-employed people (you’re treated as having paid to protect your record if profits exceed the small profits threshold).

ALLOWANCES AND RELIEFS PEOPLE OFTEN MISS

 

Trading and property allowances

You can use a £1,000 trading allowance and a separate £1,000 property allowance if your trading/property profits are less than this amount. You can’t use this allowance and claim expenses on the same income – so choose whichever gives the better result.

Rent-A-Room scheme

If you rent a furnished room in your main home, the first £7,500 of gross receipts can be tax-free under the Rent-A-Room scheme (lower if you share the income). However, if using the scheme, you also can’t offset expenses.

Pension contributions

Relief at source gives 20% automatically; higher/additional-rate relief is claimed via Self-Assessment Tax Return or HMRC’s online service. Pension contributions can also reduce adjusted net income to help with HICBC or personal allowance taper.

Gift Aid

Gift Aid boosts donations by 25% for the charity. If you pay higher or additional-rate tax, claim the extra relief through the Self-Assessment Tax Return. Ensure you’ve paid enough UK tax to cover the basic-rate uplift the charity claims.

Savings interest

Check whether your Personal Savings Allowance or starting rate for savings (0% band) reduces or eliminates any tax on interest, especially if your earned income is below or near the personal allowance.

SELF-EMPLOYED TAX RETURN: EXPENSES AND RECORDS

Claim only allowable business costs. Typical categories include office costs, travel (excluding ordinary commuting), staff costs, stock, premises costs and financial charges. Keep receipts or reliable digital records.

If you use your own vehicle for business, you may claim approved mileage allowance payments instead of actual costs (cars/vans 45p per mile for the first 10,000 business miles in the year, then 25p; motorcycles 24p; bicycles 20p). We recommend keeping a mileage log.

From 2024/25, the cash basis is the default for unincorporated businesses unless you elect for accruals. Consider which method better reflects your business and allows the most suitable reliefs.

PROPERTY INCOME: WHAT TO WATCH

• Finance costs on residential lets are restricted to a 20% tax credit, not a full deduction. However, you can still deduct other allowable running costs and repairs.
• Keep deposit scheme and agent statements.
• Consider the property allowances for small amounts of income if it gives a better result than actual expenses.
  

CAPITAL GAINS, INCLUDING CRYPTOASSETS

For 2025/26, the annual exemption amount is £3,000.

Report gains that exceed the exemption or where total disposal proceeds exceed £50,000.

If you sold crypto, shares or property, keep detailed records of dates, costs, fees and proceeds.

HMRC has a dedicated cryptoassets guidance collection and will begin receiving third-party data under the Cryptoasset Reporting Framework from 1 January 2026.

Tip: If you sold assets in 2024/25, note the mid-year CGT rate change from 30 October 2024 for most assets. Check your return reflects the correct rates.

CHILD BENEFIT AND ADJUSTED NET INCOME

If anyone in your household received child benefit and either partner had an adjusted net income over £60,000 in the year, the HICBC applies on a taper until £80,000 when it fully withdraws the benefit. The charge is reported on Self-Assessment. Pension contributions and Gift Aid can reduce adjusted net income.

STUDENT LOANS AND POSTGRADUATE LOANS

Your tax return calculation will include repayments if applicable. Check you’ve selected the right plan and entered the amounts correctly to prevent under- or over-payment. Current thresholds for 2025/26 are published on gov.uk.

MAKING TAX DIGITAL FOR INCOME TAX (MTD)

Under the current timetable, from April 2026, Making Tax Digital will apply to self-employed people and landlords with business/property income over £50,000. You will need to keep digital records and send quarterly updates.

You can read our blog about the important MTD changes and how you can prepare on the upcoming changes here.

 

COMMON PITFALLS WE SEE

• Missing interest and small dividends. Banks and platforms don’t always issue year-end summaries; download them. The PSA and £500 dividend allowance still require you to declare the income where a return is needed.
• Wrong student loan plan type. Double-check your plan to avoid incorrect deductions.
• Under-claiming pension or Gift Aid relief. Make sure you claim higher/additional-rate relief on contributions and Gift Aid.
• Payments on account surprises. New filers or those with rising income can be caught out in January. Review the figures and budget early; reduce them only when you have a sound basis.
• CGT rate split for 2024/25. If you sold assets around 30 October 2024, ensure you apply the correct rates now required.

 

SUPPORT WITH FILING YOUR TAX RETURN

Filing early gives you time to check the numbers, claim reliefs correctly and plan for any payments on account. For support on what to prepare ahead of completing your tax return, read our blog on Preparing to file your tax return

Our teams at TC Group are ready to support you with the complications of your Self-Assessment Tax Return. Get in touch today with your local office for a quote.

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Read our previous blog on Preparing to file your tax return