Tax Rates & Allowances from April 2021

Tax Rates and Allowances 2021/2022

Personal Allowances 2021/22

Personal Allowance – £12,570

The personal allowance reduces by £1 for every £2 of income above £100,000. The personal allowance is lost if taxable income exceeds £125,140 (2021/22).

Transferable tax allowance for married couples/civil partners – £1,260

Investment income allowances tax at 0%

Personal Savings Allowance (PSA) – £1,000 for Basic rate taxpayers

    – £500 for Higher rate taxpayers

    – Not available for Additional rate taxpayers

Dividend Allowance – £2,000

Other Allowances and Exemptions

Trading income allowance – £1,000

Property income allowance – £1,000

Rent a room relief – £7,500

Blind persons’ allowance – £2,520.

The dividend and personal savings allowance apply after the personal allowance and are calculated using UK, not Scottish, rates. Anything within these allowances still count towards the basic and/or higher rate tax bands.

Capital Gains Tax Exemption – £12,300

Nil Rate Band for Inheritance Tax  – £325,000

Residence nil Rate Band  – £175,000

The 2021/2022 allowances and basic rate band (20%) are frozen until April 2026.

Tax Rates

Rate                                                                       Tax Band              Income tax rate                 Dividend tax rate

Starting Rate for Savings                               £1 – £5,000                          0%                                          N/A

Basic rate                                                            £1 – £37,700                        20%                                        7.5%

Higher Rate                                                        £37,701 – £150,000          40%                                        32.5%

Additional Rate                                                 £150,000+                            45%                                        38.1%

Higher rate threshold (standard personal allowance + basic rate band) is £50,270.

Non-savings income uses up the starting rate for savings.

National Insurance Contributions

Self-employed and voluntary

Class 2 – Self Employed

Weekly – rate £3.05

Small profit threshold – £6,515

Class 3 – Voluntary

Weekly rate – £15.40

Class 4 – Self Employed

 Lower profits limit – £9,568

 Upper profit limit – £50,270

National Minimum Wage

18-20     £6.56/hour

21-22     £8.36/hour

23+         £8.91/hour

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