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

Tax brackets 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 
    
BandRateBand Rate
£0 – 37,70020%£0 – 37,50020%
£37,701 – 150,00040%£37,501 – 150,00040%
Over £150,00045%Over £150,00045%

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 rate7.5%
Dividend upper rate32.5%
Dividend additional rate38.1%

Income Tax Reliefs

 2021/222020/21
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 1035  
Minimum amount£3,530£3,510
Income limit£30,400£30,200
Blind persons allowance£2,520£2,500

Car, Van and Fuel Benefit

2020/21Cars registered pre 06.04.09Cars registered after 05.04.20
CO2 emissions g/km % of list price taxed % of list price taxed
011
1 – 50   
Electric Range – 130 or more21
Electric Range – 70 – 12954
Electric Range – 40 – 6987
Electric Range – 30 – 391211
Electric Range – under 301413
51 – 541514
For every extra 5+1+1
160 and above37n/a
165 and aboven/a37

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 £1840%
£184.01 – £96712%
Over £9672%

For employers

For employers 
Up to £1700%
Over £17013.8%

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 benefits13.8%
Class 1B (employers)On PAYE Settlement Agreements13.8%
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 £50,2709%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 valueSDLT rate
Up to £500,000Zero
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 valueSDLT rate
Up to £250,000Zero
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 valueSDLT rate
Up to £125,000Zero
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 valueSDLT rate
£0 – £150,000Zero
£150,001 to £250,0002%
Over £250,0005%

Capital Gains Tax

Capital Gains Tax2021/222020/21
Individuals  
Exemption£12,300£12,300
Standard rate10%10%
Higher/additional rate20%20%
   
Trusts  
Exemption£6,150£6,150
Rate20%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 rateLifetime rateChargeable transfers 2021/22 and 2020/21
NilNil£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 31.02.2019%Year to 31.03.2119%

Capital Allowances

Corporation tax super-deduction on certain plant and machinery130%
First Year Allowance (FYA) on certain plant, machinery and cars of 0g/km100%
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/km6%
Other plant and machinery18%
Structures and Buildings Allowance3%

Pensions

 2021/222020/21
Lifetime Allowance Limit1,078,900£1,073,100
Annual Allowance Limit£40,000£40,000
Money Purchase Annual Allowance£4,000£4,000

Value Added Tax

 From 01.04.21From 01.04.20
Standard rate20%20%
Reduced rate5%*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 benefit2021/222020/21
Basic State Pension£137.60£134.25
New State Pension£179.60£175.20
Statutory pay standard rates2021/222020/21
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

AgeNLW21 – 2218 – 2016 – 17Apprentices 
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 Dates2021/222020/21
Income Tax and Class 4 NIC  
1st payment on account31.01.2231.01.21
2nd payment on account31.07.2231.07.21
Balancing payment31.01.2331.01.22
Class 2 NIC31.01.2331.01.22
Capital Gains Tax*31.01.2331.01.22
Class 1A NIC19.07.2219.07.21

*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.

Get in touch for any further information.

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