Tax thresholds 

Currently, income tax rates and thresholds (except in Scotland) are set to remain unchanged for 2024/25. The Personal Allowance (PA), below which income is not taxed, is £12,570. The higher rate threshold at which 40% tax kicks in is £50,270 and top rate tax (45%) begins when income exceeds £125,140.  

Scotland has different tax rates and bands for non-savings, non-dividend income (e.g. employment income, business profits, rental income and pension income). In the recent Scottish Budget, the following were announced for 2024/25: 

  • There will be a new ‘advanced’ tax rate of 45% that will apply to income between £75,000 and £125,140.  
  • The top rate of tax applying to income above £125,140 will be increased to 48% (from 47%) 
  • The 19% starter, 20% basic, 21% intermediate and 42% higher rates will be unchanged.  
  • The starter and basic rate thresholds will be increased by inflation to £14,876 and £26,561 respectively. 
  • The higher rate threshold will be frozen at £43,662. 

Many Scottish taxpayers will now pay a significantly higher amount of tax than those elsewhere in the UK (although some lower earners pay slightly less than in the rest of the UK). 

Personal Allowance (PA) 

  • The PA of £12,570 is progressively withdrawn for individuals earning more than £100,000, leading to a marginal rate of 60% on income between £100,000 and £125,140. This rate is different in Scotland and for those who have dividend income within this band.  

Planning points 

  • Scottish taxpayers should consider bringing forward the payment of income to before 6 April 2024, before the big increases in tax rates for higher earners (see above). 
  • Consider taking action to reduce taxable income, particularly where income falls just above one of the thresholds. There are various options to achieve this, including pension contributions and Gift Aid donations. 
  • Income that can easily be moved from year to year includes: 
  • bonus from your own company 
  • dividends from your company 
  • encashments of life assurance bonds 
  • withdrawal of taxable income from pension schemes in ‘drawdown’. 
  • Income can also be moved between spouses, in order to make sure that PAs and lower rate tax bands are utilised. This is not always easy to do, but the following methods are permissible: 
  • make an outright gift of investments that produce taxable income 
  • put savings and investments into joint names and share the income 
  • employ the spouse or partner in the other person’s business 
  • take the spouse or partner into partnership in that business 
  • HMRC can challenge some of these methods if they think the transfer is not genuine. Always take tax advice to be sure that your plan will work. 
  • If you have children, it may be possible to switch income from one spouse to the other (as discussed above), so that both spouses’ incomes remain below the £50,000 threshold for the High-Income Child Benefit Charge.  

Gift Aid 

This is a valuable relief for gifts to charities: the gift is made out of the donor’s taxed income and the charity benefits by claiming basic rate tax on the value of the gift.  

  • Higher rate taxpayers can claim extra tax relief of 20% of the gross value of the gift.  
  • For top rate taxpayers, the extra relief is 25%. 
  • There is no cap on the amount that can qualify for Gift Aid, provided the donor has paid sufficient tax during the tax year to cover the charity’s reclaim from HMRC. 


If you are a higher rate taxpayer and you make an £800 donation to a charity, the gross value of the gift to the charity is £1,000, since it can claim back the basic rate tax of £200.  

You can claim an additional 20% tax relief on the gross value, reducing the net cost to £60. 

In order for a donation to qualify for tax relief, the charity previously had to be located in an EU member state (plus Iceland, Norway and Liechtenstein) and be recognised as a qualifying charity by HMRC. However, as part of the post-Brexit changes to tax legislation in the UK, this is now changing.   

The ability to have a non-UK charity qualify has been removed. There is a transitional period though, so that a non-UK charity which had asserted its status before 15 March 2023 will continue to qualify until 1 April 2024 (for company donations) or 5 April 2024 (for individual donations). After that, no relief will be available where donations are made to non-UK charities. This will be the case even if those overseas charities have UK activities.   

Planning points 

  • You must provide the charity with a Gift Aid declaration, so that both parties can claim the relevant tax relief. 
  • You can elect for donations made in one tax year to be treated for tax purposes as made in the prior year.  
  • This would be of benefit, for example, if you are a higher or top rate taxpayer in 2022/23 but not in 2023/24; in other cases, it will merely accelerate the higher or top rate relief.  
  • The election can only be made when submitting your tax return, which must be filed on time. 
  • Donating assets (eg shares, land and property) to charity while you are alive can also attract income tax relief. Additionally: 
  • any gain arising on the donation of such assets is exempt from CGT; and  
  • the gift itself is not subject to Inheritance Tax (IHT), even if the donor dies within seven years.  

If you are considering a gift to charity, we can make sure that it will meet the qualifying requirements. It will be particularly tax-efficient if the gross donation brings your income below the thresholds at which PA abatement or the HICBC start to bite.