Personal tax allowance, NI and income tax rates 2021/22

In the November Spending Review, Chancellor Rishi Sunak announced that some income tax and National Insurance rates and allowances would increase by 0.5%. This figure was in line with the Consumer Price Index annual increase to September 2020. However, since then, the Financial Secretary to the Treasury has confirmed that NI rates will increase by 0.5%. So, based on what we know so far, what will the personal tax allowance, National Insurance and Income Tax rates be for 2021/22?

National Insurance Rates 

The Government has now published this table of National Insurance rates, limits and thresholds in this pdf file. We have reproduced the figures below for your convenience.

Class 1 NICs (Employee and Employers)

Class 2 NICs (Self Employed)

Class 3 NICs (Voluntary)

Class 4 NICs (Self Employed

Income Tax personal allowance

The personal tax allowance for 2021/22 should increase to £12,570 – up from £12,500 in 2020/21. However, this figure is rounded up to the nearest £10, as required by the Income Tax Act 2007.

Basic rate limit

The income tax basic rate limit should be set at £37,700 – up from £37,500. Once again, this figure is rounded up to the nearest £100, again in accordance with the 2007 Act.

Pensions 

The Lower Earnings Limit (LEL) remains at £120 per week. Basic and new state pensions go up 2.5% from 12 April 2021.

Conclusion

Precise Income Tax rates are normally announced in the Chancellor’s Autumn Statement. For obvious reasons, this didn’t happen last year because of the Coronavirus pandemic. So, while the figures above reflect our understanding of upcoming income tax, personal allowance and NI changes, if further changes are announced we will let you know. Of course, if you’d like help with your annual tax return, please get in touch.