Tax brackets 2021/22 – a guide to tax rates for the 21/22 tax year

Date: March 25, 2021

Tax brackets for the year 2021/22 were once again updated following this year’s Budget on 6 March 2021.

This year, many rates remained unchanged, Inheritance Tax and Capital Gains Tax being two such rates. There were also some important changes you should be aware of, notably Super Deductions that apply to Capital Allowances can offer significant tax savings, where they apply.

As expected, the temporary extension to the nil-rate band of Stamp Duty Land Tax on residential properties was extended until 30 June, with a tapered rate following, until it returns to the standard rate on 1 October 2021.

Below are the key tax brackets and tax rates that apply for the tax year 2021/22:

Tax Brackets for the tax year 2021/22

Income Tax Brackets

Income tax rates and bands

2021/22		2021/22

Band	Rate	Band	Rate
£0 – 37,700	20%	£0 – 37,500	20%
£37,701 – 150,000	40%	£37,501 – 150,000	40%
Over £150,000	45%	Over £150,000	45%

Please note: In Scotland and Wales, income tax rates on income other than savings and dividend income have been devolved

Savings Income tax allowances

	2021/22 and 2020/21
Savings allowance basic rate	£1,000
Savings allowance higher rate	£500

Please note: A starting rate of 0% may be available unless taxable non-savings income exceeds £5,000.

Dividend Income tax brackets

	2021/22 and 2020/21
Dividend allowance	£2,000
Dividend ordinary rate	7.5%
Dividend upper rate	32.5%
Dividend additional rate	38.1%

Income Tax Reliefs

	2021/22	2020/21
Personal allowance	£12,570	£12,500
Personal allowance income limit	£100,000	£100,000
Marriage allowanceTransferable between certain spouses where neither pay tax above the basic rate	£1,260	£1,250
Married couple’s allowance (relief given at 10%)	£9,125	£9,075
Either partner born before 6 April 1935
Minimum amount	£3,530	£3,510
Income limit	£30,400	£30,200
Blind persons allowance	£2,520	£2,500

Car, Van and Fuel Benefit

2020/21	Cars registered pre 06.04.09	Cars registered after 05.04.20
CO2 emissions g/km	% of list price taxed	% of list price taxed
0	1	1
1 – 50
Electric Range – 130 or more	2	1
Electric Range – 70 – 129	5	4
Electric Range – 40 – 69	8	7
Electric Range – 30 – 39	12	11
Electric Range – under 30	14	13
51 – 54	15	14
For every extra 5	+1	+1
160 and above	37	n/a
165 and above	n/a	37

For fully diesel cars generally add a 4% supplement (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard) but the maximum is still 37%. For emissions of 75g/km or more if the CO2 figure does not end in a 5 or 0 round down to the nearest 5 or 0.

	2020/21
Car fuel benefit	£24,500
Van benefit	£3,490
Van fuel benefit	£666

National Insurance

2021/22 Class 1 (employed) rates

For employees

For employees
Up to £184	0%
£184.01 – £967	12%
Over £967	2%

For employers

For employers
Up to £170	0%
Over £170	13.8%

Please note: Entitlement to contribution-based benefits for employees retained for earnings between £120 and £184 per week. The employer rate is 0% for employees under 21 and apprentices under 25 on earnings up to £967 per week.

Class 1A (employers)	On employee taxable benefits	13.8%
Class 1B (employers)	On PAYE Settlement Agreements	13.8%
Class 2 (Self-employed)	Flat rate per weekSmall profits threshold	£3.05£6,515 per annum
Class 3 (voluntary)	Flat rate per week	£15.40
Class 4 (self-employed)	On profits between £9,588 – £50,270Excess over £50,270	9%2%

Stamp Duty Land Tax

At Budget 2021, the Chancellor extended the nil-rate threshold of £500,000 until 30 June 2021 and introduced a tapered rate until October 2021. The rates are as follows:

Please note: Land and buildings in England and N. Ireland. Residential rates may be increased by 3% where further residential properties are acquired.

Residential Stamp Duty rates 08.07.2020 to 30.06.2021
Property or lease premium or transfer value	SDLT rate
Up to £500,000	Zero
The next £425,000 (the portion from £500,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

Residential Stamp Duty rates from 01.07.2021 to 30.09.2021
Property or lease premium or transfer value	SDLT rate
Up to £250,000	Zero
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

Residential Stamp Duty rates from 01.10.2021
Property or lease premium or transfer value	SDLT rate
Up to £125,000	Zero
The next £125,000 (the portion from £125,001 to £250,000)	2%
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

Non-residential Stamp Duty rates
Property or lease premium or transfer value	SDLT rate
£0 – £150,000	Zero
£150,001 to £250,000	2%
Over £250,000	5%

Capital Gains Tax

Capital Gains Tax	2021/22	2020/21
Individuals
Exemption	£12,300	£12,300
Standard rate	10%	10%
Higher/additional rate	20%	20%

Trusts
Exemption	£6,150	£6,150
Rate	20%	20%

Higher rates (18/28%) may apply to the disposal of certain residential property and carried interest.

Business Asset Disposal Relief

The first £1m of qualifying gains are charged at 10%.

Inheritance Tax

Death rate	Lifetime rate	Chargeable transfers 2021/22 and 2020/21
Nil	Nil	£0 – £325,000 (nil rate band)
40%	20%	Over £325,000

A further nil rate band of £175,000 may be available in relation to current or former residences.

Corporation Tax

	Rate		Rate
Year to 31.02.20	19%	Year to 31.03.21	19%

Capital Allowances

Corporation tax super-deduction on certain plant and machinery	130%
First Year Allowance (FYA) on certain plant, machinery and cars of 0g/km	100%
Corporation tax FYA on long-life assets, integral features of buildings, etc.	50%
Annual Investment Allowance (AIA)	£1,000,000 (£200,000 from 1 January 2022) – excludes cars

Writing Down Allowance

Long-life assets, integral features of buildings, cars over 50g/km	6%
Other plant and machinery	18%
Structures and Buildings Allowance	3%

Pensions

	2021/22	2020/21
Lifetime Allowance Limit	1,078,900	£1,073,100
Annual Allowance Limit	£40,000	£40,000
Money Purchase Annual Allowance	£4,000	£4,000

Value Added Tax

	From 01.04.21	From 01.04.20
Standard rate	20%	20%
Reduced rate	5%*	5%
Annual Registration Limit	£85,000	£85,000
Annual Deregistration Limit	£83,000	£83,000

*12.5% for hospitality and tourism from 1 October 2021 – 31 March 2022.

Selected Rates

Weekly benefit	2021/22	2020/21
Basic State Pension	£137.60	£134.25
New State Pension	£179.60	£175.20

Statutory pay standard rates	2021/22	2020/21
Average weekly earnings	£120 or over	£120 or over
Sick Pay	£96.35	£95.85
Maternity/Adoption Pay	£151.97	£151.20
Shared Parental Pay	£151.97	£151.20
Paternity Pay	£151.97	£151.20

National Living Wage and National Minimum Wage

Age	NLW	21 – 22	18 – 20	16 – 17	Apprentices
From 1 April 2021	£8.91	£8.36	£6.56	£4.62	£4.30

Applies to apprentices under 19, or 19 and over in the first year of apprenticeship. NLW applies to those aged 23 and over

Key Dates and Deadlines

Payment Dates	2021/22	2020/21
Income Tax and Class 4 NIC
1^st payment on account	31.01.22	31.01.21
2^nd payment on account	31.07.22	31.07.21
Balancing payment	31.01.23	31.01.22
Class 2 NIC	31.01.23	31.01.22
Capital Gains Tax*	31.01.23	31.01.22
Class 1A NIC	19.07.22	19.07.21

*Please note: For residential properties sold on or after 6 April 2020, Capital Gains Tax is due within 30 days of completion.

Please note: all rates quoted are for guidance only and whilst are believed to be correct as of 10 March 2021 these rates may be subject to change. No responsibility for loss occasioned by any person acting/refraining from action because of this information can be accepted.

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