What changes in reliefs and deductions affect UK Self Assessment filings in the 2024/25 tax year?

Understanding the context of the 2024/25 Self Assessment landscape

The UK Self Assessment system is designed to capture a wide range of income sources and to apply reliefs and deductions that reflect both personal circumstances and government policy objectives. For the 2024/25 tax year, the overall framework of Self Assessment remains familiar, but a number of changes, freezes, thresholds, and clarifications to reliefs and deductions significantly affect how taxpayers calculate their liabilities. While some of these changes arise from explicit policy decisions, others result from the continued freezing of allowances and thresholds, which has a real-world impact on the amount of tax payable.

This article focuses on the reliefs and deductions most relevant to individuals completing a Self Assessment return for 2024/25. It explains what has changed, what has remained static but become more significant, and how these developments may affect different categories of taxpayers, including the self-employed, landlords, investors, and higher earners. The aim is to provide practical clarity rather than procedural guidance, helping taxpayers understand where their tax position may differ from previous years.

Personal Allowance and the impact of continued freezes

The Personal Allowance remains one of the most important reliefs in the UK tax system. For the 2024/25 tax year, the standard Personal Allowance is unchanged at £12,570. On the surface, this stability may appear to simplify matters, but in practice the ongoing freeze has significant implications.

As earnings rise due to inflation or wage growth, more income becomes taxable even though the allowance itself has not changed. For Self Assessment taxpayers, particularly those with mixed income streams, this can result in a higher overall tax liability despite no change in headline tax rates. The effect is especially noticeable for those who previously remained just below the tax threshold and now find themselves required to file a return.

The tapering of the Personal Allowance for individuals with adjusted net income above £100,000 also remains unchanged. For every £2 of income above this level, £1 of Personal Allowance is lost, meaning it is fully withdrawn at £125,140. Because these thresholds are also frozen, more taxpayers are drawn into this effective marginal tax rate band, making reliefs that reduce adjusted net income, such as pension contributions and Gift Aid donations, more valuable in 2024/25.

Marriage Allowance and transferable allowances

The Marriage Allowance continues to allow eligible couples to transfer a portion of the lower earner’s Personal Allowance to their spouse or civil partner. For 2024/25, the transferable amount remains £1,260, resulting in a potential tax saving of up to £252 for the recipient.

While the rules governing eligibility have not changed, the broader context has. With more individuals being pulled into higher tax bands due to frozen thresholds, some couples may find that they no longer qualify because the recipient has become a higher or additional rate taxpayer. Conversely, others who previously saw little benefit may find the allowance more meaningful as their overall tax burden increases.

For Self Assessment filers, it remains important to ensure that the Marriage Allowance claim is correctly reflected in the return, particularly where one partner has income that fluctuates from year to year.

Pension contributions and tax relief adjustments

Pension contributions continue to be one of the most effective deductions available through Self Assessment, and their relative importance has grown in the 2024/25 tax year. While contribution rules themselves have not undergone dramatic change, the surrounding policy environment has shifted.

The abolition of the Lifetime Allowance charge in earlier tax years means that, for 2024/25, taxpayers no longer face a direct tax penalty for exceeding the former lifetime limit. This has encouraged higher earners to reconsider pension contributions as a means of reducing taxable income. However, the Annual Allowance remains relevant, and taxpayers must still ensure that total contributions do not exceed the permitted limits without incurring a tax charge.

For Self Assessment purposes, the key point is that pension contributions made under relief at source schemes extend the basic rate band and reduce adjusted net income. This can mitigate the loss of the Personal Allowance and reduce exposure to higher and additional rates of tax. In a year where allowances are frozen, these effects are more pronounced.

Taxpayers making large or irregular pension contributions should pay particular attention to the correct reporting of gross contributions and any carry-forward of unused allowances, as errors in this area can materially affect the final tax calculation.

Gift Aid donations and charitable relief

Gift Aid remains an important relief for taxpayers who make charitable donations. For 2024/25, the fundamental mechanics of Gift Aid have not changed, but its strategic value has increased due to frozen thresholds.

When a taxpayer makes a Gift Aid donation, it is treated as having been made net of basic rate tax. The grossed-up amount extends the basic rate band, which can be especially beneficial for higher and additional rate taxpayers. As with pension contributions, this extension can reduce or eliminate the effective 60% marginal tax rate that applies where the Personal Allowance is being withdrawn.

For Self Assessment filers, it is essential to ensure that Gift Aid donations are accurately reported in the correct tax year. Donations made close to the end of the tax year can sometimes be misallocated, leading to missed relief. The 2024/25 tax year is no exception, and careful record-keeping remains critical.

Trading Allowance and changes for small-scale income

The Trading Allowance, which allows individuals to earn up to £1,000 from trading activities without paying tax or reporting the income, remains unchanged for 2024/25. However, its interaction with Self Assessment has become more prominent.

As more individuals engage in side hustles, digital services, and casual self-employment, the question of whether income needs to be declared is increasingly relevant. For those whose gross trading income exceeds £1,000, Self Assessment is generally required, and the allowance can be claimed as a deduction instead of actual expenses.

While there is no change in the allowance amount, taxpayers should be aware that choosing between the Trading Allowance and actual expense deductions can materially affect taxable profit. In a year where other reliefs are constrained by frozen thresholds, making the optimal choice here can help manage overall tax exposure.

Property income allowances and landlord deductions

The Property Income Allowance, like the Trading Allowance, remains set at £1,000 for 2024/25. For landlords with modest rental income, this allowance can simplify reporting and reduce administrative burden. However, for many landlords, especially those with higher expenses, claiming actual deductions remains more beneficial.

One of the most significant ongoing issues for property owners is the restriction on relief for finance costs. Mortgage interest relief continues to be given as a basic rate tax reduction rather than a deduction from rental income. This regime is fully embedded by 2024/25, but its effects continue to be felt, particularly by higher and additional rate taxpayers.

For Self Assessment filers, this means that rental profits may appear higher than the economic reality, increasing exposure to higher tax bands and potentially affecting entitlement to other reliefs. While the rules themselves have not changed, the cumulative impact alongside frozen allowances makes accurate reporting and planning more important than ever.

Capital allowances for the self-employed

Self-employed individuals and partners in partnerships can claim capital allowances on qualifying expenditure for use in their trade. For 2024/25, the Annual Investment Allowance continues to provide 100% relief on qualifying expenditure up to the applicable limit.

Although the headline rules are stable, the decision to claim capital allowances, and the timing of those claims, can have a greater impact in the current tax environment. By reducing taxable profits, capital allowances can help keep income below key thresholds, preserving entitlement to the Personal Allowance and child-related benefits.

For Self Assessment purposes, it is important to distinguish between revenue expenses and capital expenditure and to ensure that any private use adjustments are correctly applied. Errors in this area can lead to overclaims or underclaims, both of which may have consequences if reviewed by HMRC.

Employment expenses and relief for employees

Employees who complete a Self Assessment return may be entitled to claim relief for certain employment-related expenses. For 2024/25, the categories of allowable expenses remain largely unchanged, but the context in which they are claimed has shifted.

Relief for working from home expenses, professional subscriptions, and necessary travel costs continues to be available where the statutory conditions are met. However, as more employers have returned to office-based working or adopted hybrid models, the eligibility for some claims has become more nuanced.

For Self Assessment filers, particularly those with multiple employments or mixed employment and self-employment income, accurately identifying which expenses qualify and ensuring they are not reimbursed by the employer is essential. While these deductions may appear modest individually, they can collectively reduce taxable income enough to make a meaningful difference in 2024/25.

Reliefs affecting adjusted net income and benefit charges

Adjusted net income plays a central role in determining entitlement to several reliefs and benefits, including the High Income Child Benefit Charge. For the 2024/25 tax year, the structure of this charge has not fundamentally changed, but its interaction with reliefs has become more prominent.

As thresholds remain frozen, more families find themselves subject to the charge or facing higher effective tax rates. Reliefs such as pension contributions and Gift Aid donations reduce adjusted net income and can therefore mitigate or eliminate the charge.

Self Assessment filers affected by the High Income Child Benefit Charge must ensure that they correctly calculate adjusted net income and apply relevant deductions. Inaccurate reporting can result in unexpected liabilities or missed opportunities to reduce the charge through legitimate reliefs.

Loss relief and changes in emphasis

Loss relief remains an important mechanism for smoothing taxable income over time, particularly for the self-employed and those with fluctuating income. For 2024/25, the core rules around loss relief have not changed, but their practical importance has increased.

With more taxpayers facing higher effective tax rates due to frozen allowances, the ability to offset losses against other income or carry them forward to future years can provide valuable flexibility. Deciding whether to use losses against current-year income or preserve them for future profits requires careful consideration of current and expected tax positions.

For Self Assessment purposes, it is essential to make explicit claims for loss relief within the required time limits. Failure to do so can result in the permanent loss of relief, which may be more costly in a high-tax environment.

Reliefs for savings and investment income

Savings and investment income is subject to a range of allowances and reliefs that continue to apply in 2024/25. The Personal Savings Allowance and the Dividend Allowance remain key features, but their real value has been eroded by reductions and freezes in previous years.

For Self Assessment filers with significant savings or dividend income, these allowances may be fully used or exceeded, bringing more income into charge. While the allowances themselves have not changed for 2024/25, their interaction with other income sources and reliefs requires careful attention.

Taxpayers should ensure that savings and dividend income is correctly reported and that any available reliefs, such as relief for qualifying loan interest or allowable investment expenses, are properly claimed where applicable.

Interaction of multiple reliefs and the importance of planning

One of the defining features of the 2024/25 tax year is not a single dramatic policy change, but the cumulative effect of multiple freezes and incremental adjustments. Reliefs and deductions that may once have seemed marginal now play a more central role in determining overall tax liability.

For Self Assessment filers, understanding how different reliefs interact is crucial. Pension contributions, Gift Aid donations, loss relief, and capital allowances can all affect adjusted net income, tax bands, and entitlement to allowances. The order in which these reliefs are applied can influence the final outcome.

While Self Assessment is inherently retrospective, the 2024/25 landscape underscores the value of forward-looking awareness. Even without engaging in complex tax planning, being mindful of how reliefs operate can help taxpayers avoid surprises and make informed decisions.

Common pitfalls and areas of increased scrutiny

As reliefs become more valuable, the risk of errors and omissions also increases. For 2024/25, common pitfalls include misreporting pension contributions, failing to gross up Gift Aid donations, incorrectly claiming allowances instead of actual expenses, and misunderstanding the treatment of finance costs for property income.

Self Assessment filers should also be aware that HMRC continues to focus on accuracy and completeness. While this article does not address compliance procedures, it is worth noting that consistent and well-supported claims for reliefs reduce the risk of queries or adjustments.

Conclusion: what has really changed for 2024/25

In summary, the changes in reliefs and deductions affecting UK Self Assessment filings in the 2024/25 tax year are less about headline reforms and more about context. The continued freezing of allowances and thresholds has amplified the importance of existing reliefs, making them more consequential for a wider range of taxpayers.

Personal Allowance tapering, pension contribution relief, Gift Aid, and income-based charges now affect more individuals than in previous years. For those completing a Self Assessment return, understanding these dynamics is essential to accurately assessing liability and making full use of the reliefs available.

While the rules themselves may feel familiar, their impact in 2024/25 is not. A careful, informed approach to reliefs and deductions can make a meaningful difference in navigating the evolving Self Assessment landscape.