Tax Rates

Income Tax

Allowances 2021/22 2020/21
Personal Allowance (PA)* £12,570 £12,500
Marriage Allowance† 1,260 1,250
Blind Person’s Allowance 2,520 2,500
Rent a room relief** 7,500 7,500
Rent a room relief** 1000 1000
Property income** 1000 1000

* PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000.
There is no allowance given above £125,140

† The part of the PA that is transferable to a spouse or civil partner who is not a higher or top rate taxpayer.

** If gross income exceeds it, the limit may be deducted instead of actual expenses.

Rate bands 2021/22 2020/21
Basic rate band (BRB) £37,700 £37,500
Higher Rate Band (HRB) 37,701 – 150,000 37,501 – 150,000
Additional rate Over 150,000 Over 150,000
Personal Savings Allowance (PSA) 7,500 7,500
– Basic rate taxpayer 1000 1000
– Higher rate taxpayer 500 500
Dividend Allowance (DA) 2,000 2,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax rates 2021/22 and 2020/21
Rates differ for General, Savings and Dividend income G S D
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 45% 45% 38.1%

General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest). Scottish taxpayers are taxed at different rates on general income (see below).

To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £2,000 of dividend income at nil, rather than the rate that would otherwise apply.

Income tax – Scotland 2021/22* Band Rate
Starter Rate £2,097 19%
Basic Rate 2,098 – 12,726 20%
Intermediate Rate 12,727 – 31,092 21%
Higher Rate 31,093 – 150,000 41%
Top Rate over 150,000 46%

The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

Remittance basis charge 2021/22 2020/21
For non-UK domiciled individuals who have been
UK resident in at least:
7 of the preceding 9 tax years £30,000 £30,000
12 of the preceding 14 tax years 60,000 60,000
15 of the preceding 20 tax years Deemed to be UK domiciled

You are advised to consult us before acting on any information contained herein.

Pensions

Registered Pensions 2021/22 2020/21
Lifetime allowance (LA) £1,073,100 £1,073,100
Annual allowance (AA)* 40,000 40,000

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

*  Usually tapered (down to a minimum of £4,000) when adjusted income exceeds £240,000.

State pension (per week) 2021/22 2020/21
Old state pension – Single person £137.60 £134.25
Old state pension – Married couple 220.05 214.70
New state pension† 179.60 175.20

applies to those reaching state retirement age after 5 April 2016.

You are advised to consult us before acting on any information contained herein.

Annual Investment Limits

2021/22 2020/21
Individual Savings Account (ISA)
– Overall limit £20,000 £20,000
– Lifetime ISA 4,000 4,000
Junior ISA 9,000 9,000
EIS* – 30% relief 2,000,000 2,000,000
EIS eligible for CGT deferral relief Unlimited Unlimited
Seed EIS (SEIS) – 50% relief 100,000 100,000
SEIS – 50% exemption for reinvested gains 100,000 100,000
Venture Capital Trust (VCT) – 30% relief 200,000 200,000

You are advised to consult us before acting on any information contained herein.

National Insurance Contribution

Employee Employer
Main NIC rate 12.0% 13.8%
No NIC on first £184pw £170pw
Main rate* charged up to £967pw no limit
2% rate on earnings above £967pw N/A
Employment allowance per business** N/A £4,000

* Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £967pw.

** Some businesses do not qualify, including certain sole director companies and employers who have an employer’s class 1 NIC liability of £100,000 or more for 2020/21s.

Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee’s behalf under a PAYE settlement agreement (Class 1B).

You are advised to consult us before acting on any information contained herein.

Vehicle Benefits

Cars

Taxable benefit: Chargeable value multiplied by chargeable %.

Chargeable value:

Initial list price of car (including most accessories), reduced by any capital contribution (maximum £5,000) by employee when the car is first made available.

2021/22 percentage for petrol cars first registered:

CO2 emissions g/km* Electric range miles Pre 6.04.2020 Post 5.04.2020
0 N/A 1% 1%
1-50 >130 2% 1%
1-50 70-129 5% 4%
1-50 40-69 8% 7%
1-50 30-39 12% 11%
1-50 14% 13%
51-54 N/A 15% 14%

Then a further 1% for each 5g/km CO2 emissions, up to a maximum of 37%.

Diesel cars that are not RDE2 standard suffer a 4% supplement on the above figures but are still capped at 37%

Vans

Chargeable value of £3,500 (2020/21 £3,490) if private use is more than home-to-work. Zero emission vans charged at £Nil (2020/21: £2,792).

Fuel

Employer provides fuel for private motoring in an employer-owned:

Car: CO2-based percentage from above table multiplied by £24,600 (2020/21 £24,500).

Van: £669 (2020/21 £666).

Employee contributions do not reduce taxable figure unless all private fuel is paid for by the employee (in which case there is no benefit charge).

You are advised to consult us before acting on any information contained herein.

Tax-Free mileage allowances

Employee’s own transport per business mile
Cars first 10,000 miles 45p
Cars over 10,000 miles 25p
Business passengers 5p
Motorcycles 24p
Bicycles 20p

You are advised to consult us before acting on any information contained herein.

Capital Gains Tax

2021/22 2020/21
Annual exemption
Individuals, estates £12,300 £12,300
Most trusts 6,150 6,150
Tax rate
Individual (to basic rate limit)* 10% 10%
Individual (above basic rate limit)* 20% 20%
Trusts, estates* 20% 20%
Entrepreneurs’ Relief (ER)** 10% 10%
Investors’ Relief (IR)*** 10% 10%

* Individuals are taxed at 18%/28% on gains on residential property and receipts of carried interest. Trusts and estates are taxed at 28% in these circumstances.

** Lifetime limit for qualifying gains: BADR £1m; IR £10m

You are advised to consult us before acting on any information contained herein.

Corporation Tax

Year to 31.3.2022
Corporation Tax rate 19%
Research and development relief From 1.1.2021
SME enhanced expenditure
deduction scheme*
130%
Large company R&D Expenditure
Credit (RDEC) scheme**
13%

* Additional deduction for qualifying R&D

** Taxable expenditure credit for qualifying R&D

SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss (capped at £20,000 plus 3 x PAYE & NIC for periods beginning from 1.4.21).

You are advised to consult us before acting on any information contained herein.

Main capital allowances

Plant and machinery allowances Rate
Annual Investment Allowance (AIA)
– expenditure 1.1.19 – 31.12.21 £1,000,000 100%
– expenditure from 1.1.22 200,000 100%
Energy/water-efficient equipment 100%
Writing down allowance: general pool (reducing balance) 18%
Writing down allowance: special rate pool (reducing balance)* 6%
Motor cars purchased
From 1.4.21
CO2 (g/km)
Pre 1.4.21
CO2 (g/km)
Allowance
New cars only Nil up to 50 100%
In general pool up to 50 up to 110 18% pa
In special rate pool* above 50 above 110 6% pa
Structures and buildings allowance
Fixed deduction per annum 3%

You are advised to consult us before acting on any information contained herein.

Property Taxes

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to ‘high value’ residential properties owned via a corporate structure, unless the property is used for a qualifying purpose.

Property value Annual charge to
31.3.2022 31.3.2021
£0.5m – £1m £3,700 £3,700
£1m – £2m 7,500 7,500
£2m – £5m 25,300 25,200
£5m – £10m 59,100 58,850
£10m – £20m 118,600 118,050
Over £20m 237,400 236,250

Stamp Duty Land Tax (SDLT), Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT)

Residential property (1st property only)

SDLT – England & NI
£000
Rate on band LBTT – Scotland
£000
Rate on band LTT – Wales
£000
Rate on band
Up to 125* Nil Up to 145 Nil Up to 180** Nil
125 – 250 2% 145 – 250 2% 180 – 250 3.5%
250 – 925 5% 250– 325 5% 250 – 400 5.0%
925 – 1,500 10% 325 – 750 10% 400 – 750 7.5%
Over 1,500 12% Over 750 12% 750 – 1,500 10.0%
Over 1,500 12.0%

*Nil band rate up to 30.6.21 is £500,000, between 1.7.21 – 30.9.21 is £250,000.

**Nil rate band up to 30.6.21 is £250,000.

A supplement applies to all three taxes where an additional residential property is purchased for more than £40,000 (unless replacing a main residence). It is also payable by all corporate purchasers. The rate is 3% (LBTT and LTT: 4%) of the total purchase price.

SDLT: From 1.7.21, First-time buyers purchasing a property of up to £500,000 pay a nil rate on the first £300,000 of purchase price.

LBTT: First-time buyers relief increases the nil rate band to £175,000 from 1.4.21.

SDLT: A rate of 15% may apply to the total purchase price, where the property is valued above £500,000 and purchased by a ‘non-natural person’ (e.g. a company).

Non-residential or mixed use property

SDLT – England & NI
£000
Rate on band LBTT – Scotland
£000
Rate on band LTT – Wales
£000
Rate on band
Up to 150 Nil Up to 150 Nil Up to 225 Nil
150 – 250 2% 150 – 250 1% 225 – 250 1%
Over 250 5% Over 250 5% 250 – 1,000 5%
Over 1,000 6%

You are advised to consult us before acting on any information contained herein.

Value Added Tax

Standard rate (1/6 of VAT-inclusive price) 20%
Tourism and hospitality sector up to 30.9.21 5%
Tourism and hospitality sector 1.10.21 to 31.3.22 12.5%
Registration level from 1.4.2017 £85,000 per annum
Deregistration level from 1.4.2017 83,000 per annum

Flat rate scheme (FRS)

Annual taxable turnover to enter scheme Up to £150,000
Must leave scheme if annual taxable turnover Exceeds £230,000

Cash accounting and Annual accounting schemes

Annual taxable turnover to enter scheme Up to £1.35m
Must leave scheme if annual taxable turnover Exceeds £1.60m

Option to tax property

Notify HMRC within 30 days.

You are advised to consult us before acting on any information contained herein.

Inheritance Tax

2021/22 2020/21
Nil rate band (NRB)* £325,000 £325,000
NRB Residential enhancement (RNRB)†* 175,000 175,000
Rate of tax above nil rate band** 40% 40%
Lifetime transfers to most trusts 20% 20%

† RNRB is available for transfers of a main residence to direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

* Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

** Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death 0-3 3-4 4-5 5-6 6-7
% of full death tax charge payable 100 80 60 40 20

You are advised to consult us before acting on any information contained herein.

Key dates and deadlines

Payment dates

Self assessment 2021/22 2020/21
1st payment on account 31 January 2022 2021
2nd payment on account 31 July 2022 2021
Balancing payment 31 January 2023 2022
Capital Gains Tax* 31 January 2023 2022

*UK residential property: CGT due within 30 days of completion.

Other payment dates

Class 1A NIC 19 July 2022 2011
Class 1B NIC 19 October 2022 2021

Corporation tax is due 9 months and 1 day from the end of the accounting period, unless a ‘large’ company paying by quarterly instalments.

2020/21 Filing deadlines

Issue P60s to employees 31 May 2021
P11D, P11D(b) 6 July 2021
Self assessment tax return (SATR) paper version 31 October 2021
Online SATR if outstanding tax
to be included in 2020/21 PAYE code
30 December 2021
Online SATR 31 January 2022

You are advised to consult us before acting on any information contained herein.

Useful rates

National Minimum Wage
Rates per hour
From 1.04.21 From 1.04.22
Aged 23 and over (National Living Wage) £8.91 £9.50
Aged 21 – 22 8.36 9.18
Aged 18 – 20 6.56 6.83
Under 18 4.62 4.81
Apprentices 4.30 4.81
Child Benefit (per week) 2021/22 2020/21
First eligible child £21.15 £21.05
Each subsequent child £14.00 13.95

You are advised to consult us before acting on any information contained herein.